BOISE — Farm organization leaders are leery of a draft document suggesting the Idaho Department of Lands should consider buying agricultural and timber property with revenue from sales of its commercial and residential holdings.

The Idaho Land Board’s consultant, Callan Associates, released a draft of its Strategic Reinvestment Plan on March 15, suggesting agricultural land would be a good investment for the department, assuming it could generate at least a 4.5 percent rate of return, and timber would also be worth considering, if the rate of return were at least 3.5 percent.

IDL Director Tom Schultz said sales of IDL cottage lots along Priest Lake and Payette Lake, which have been leased to homeowners who have built on them, and the department’s commercial properties in the Boise area should generate about $162.6 million by the end of Fiscal Year 2020 to invest in other areas. Schultz believes financial return goals on property acquisitions are attainable, and he said IDL may also opt to put revenue in its Permanent Fund, where it would be invested in stocks and bonds.

IDL, which has a mandate to maximize profits from its assets, began selling the cottage lots in 2007, investing revenue generated in commercial property. In April, Callan advised IDL that owning commercial property was a poor strategic fit. In addition to the cottage lots, IDL plans to sell about $30 million in commercial real estate, mostly office buildings in the Boise area.

Public comment on the draft plan will be accepted through April 15 at comments@idl.idaho.gov. The board will vote to finalize the plan in May.

Schultz said he plans to solicit feedback during the next weeks from county commissioners and agricultural organizations including the Idaho Cattle Association, Idaho Wool Growers and Idaho Farm Bureau Federation.

If the board opts to reinvest in land, Schultz believes timber will be its priority. Schultz said he worked in Montana when the state bought some grazing land, and many ranchers nearing retirement appreciated the opportunity to sell their land and then lease it back to continue operating. But he acknowledged, “The fact that we’re buying land would raise concerns among certain folks.”

Schultz stressed the state would lease all of its new ground to private farmers and timber companies rather than working it.

Brent Olmstead, with Milk Producers of Idaho, is concerned about the potential for the state to take land off of tax rolls, while also competing with private producers to purchase it.

“Some of the problems people identified in the state owning commercial property are there when they own agricultural property,” Olmstead said.

Blair Wilson, president of Northwest Farm Credit, also worries about the state competing for land with farmers and timber companies.

“It was the irony of it that struck me,” Wilson said. “Why would the farmers be any more thrilled to have the state competing with them than the commercial people?”

Sen. Jim Guthrie, R-McCammon, a cattle rancher, believes the state could earn a favorable return while avoiding closing costs and fees by retaining its commercial property. He opposes the state being in competition for land with private producers and believes too much of Idaho is already public land.

“I see a lot of good reason for the state to exercise caution in that regard,” Guthrie said.

Russ Hendricks, with Idaho Farm Bureau, said he appreciates that Schultz has notified his organization about the issue early in the process and anticipates his members will take a position on it.

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