Friday, March 16, 2012

Red faces ahead?

Should the Idaho Land Board do more with its endowment lands than sell them, sell off timber or lease grazing rights?

When it sells lands that it holds in trust for the benefit of public schools, should it be free to use the proceeds to buy and operate individual businesses that compete with others in the private sector? Or should it be restricted to holding property and leasing out businesses to private operators?

The Idaho House recently passed a bill that would have required the board to stick to its knitting and try to maximize revenue without owning and operating Main Street businesses.

But the Senate had other ideas. It killed the House bill and left the Land Board free to do pretty much as it pleases when it comes to investing endowment money.

Consequently, if the Land Board decides there's money to be made by owning and operating nearly any kind of commercial business, there's nothing in state law that can keep it from doing so.

Land Board cappuccino, anyone?

The Land Board got support for this position from everyone from education associations to parents concerned about school funding. Why? Because the board's 2010 foray into a Main Street business, Affordable Self Storage, paid off with high 8 percent returns—good in a bad economy.

Yet, members of the House were rightly uncomfortable with the Land Board's entrepreneurial bent. They feared that state-owned businesses could obtain advantages that competing privately held businesses could not. It's arguable, but the fear exists, and there's little in the law to reassure private businesses otherwise.

The Land Board majority has maintained that owning and operating businesses on state land is no different than owning and leasing property to others who could run a similar business. Under pressure from education groups, the Senate Resource Committee agreed.

Here's a prediction: The Land Board will pursue investments in small businesses until the day one of them spills some serious red ink. It will happen. Then, embarrassed board members will renounce dabbling in Main Street and beat a swift retreat to less volatile investments.

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