Idaho officials have sold seven commercial properties for $17.3 million as part of a plan to get rid of politically contentious commercial real estate and use the money to buy timberland and agricultural land that the state uses to generate revenue to fund schools.
The Idaho Department of Lands sold the properties on Thursday in an auction that officials said brought in $4.5 million more than the appraised value of the properties.
"I was surprised we got that much above the appraised value," said Secretary of State Lawerence Denney, one of five members of the Idaho Land Board who previously approved the sale.
The commercial properties in the 2014 election became a political liability for some board members when challengers contended state-owned commercial property unfairly competes with private businesses.
Six of the commercial properties are in Boise and one is in Idaho Falls. Two properties in Idaho Falls received no bids. The properties cannot be sold for less than their appraised value.
Idaho Department of Lands spokeswoman Sharla Arledge said the agency plans to continue to try to sell the two properties, but may do some re-evaluation of them in the future.
The Idaho Land Board includes Gov. C.L. "Butch" Otter, Denney and three other statewide elected officials. The board withheld a tenth property from the sale close to the Capitol Mall that may be useful for state purposes, such as offices.
Denney, who joined the Land Board after that election to replace a retiring member, has been an opponent of the state owning commercial real estate.
"I'm happy to see us divest of these properties," he said.
The state has also been selling residential cottage sites and, combined with the commercial real estate, is expected to raise about $160 million to buy timberland and agricultural land.
The state received 3.65 million acres of endowment land at statehood in 1890 that generates money, mainly for public schools. Over the years, the state has sold about 33 percent and now has about 2.44 million acres remaining. About a million acres of that is forest that generates money for the state through timber sales.
The Land Board veered off into commercial real estate about a decade ago on the advice of financial planners but its members later faced fierce criticism that they were unfairly competing with private businesses. In May, the board adopted a new strategic reinvestment plan calling for using money from the sale of commercial real estate and residential cottage sites to buy resource-producing lands.
The Land Board has quickly moved in that direction, and last month opted to add to state forest land by approving spending $2.5 million to buy 2,400 acres of forest in northern Idaho from a timber company. Experts say the deal exceeds a minimum financial return of 3.5 percent. State officials say existing mature stands on the property could be harvested within five years.
The Land Board has a constitutional responsibility to manage the 2.44 million acres to maximize financial returns over the long term.
A financial adviser previously told the board that it would meet that obligation by selling the commercial properties now when the real estate market is good for sellers.
"It may be better next year. But I think we did well," Denney said.