Idaho Supreme Court issues surprise ruling in sale of Boise’s ITD campus to developers

Three developers who thought they’d struck a deal with the state to redevelop the old Idaho Transportation Department campus in Boise just lost their fight to save it.

In a surprise ruling before oral arguments were scheduled to take place, the Idaho Supreme Court on Tuesday ruled unanimously against the trio and in favor of legislators who thought the deal wasn’t good enough.

The court’s ruling likely kills plans by Boise’s Hawkins Cos. and The Pacific Cos. and Utah’s FJ Management to convert the property at 3311 W. State St. into over 2,000 homes and about 150,000 square feet of commercial space.

They had believed the $51.8 million sale was virtually a done deal when the Legislature stepped in and passed two bills revoking it. State officials were on the verge of signing the deal when the Legislature intervened, leading them to delay signing — a key decision, the Supreme Court said, because it meant the developers had no legally enforceable agreement.

Gov. Brad Little did not sign or veto either of the two budget bills that revoked the sale, allowing them to become law. But he said that the legislation “unfairly cancels an agreed-upon sales process, causing future reputational risk for the state of Idaho.”

Brian Huffaker, CEO of Hawkins, previously told the Idaho Statesman that the legislation was “plainly unconstitutional interference into a competitively bid land sale.”

Huffaker told the Statesman by email that the court’s Tuesday ruling was shocking, disappointing and frustrating.

“Despite months of opportunities for all three branches of state government to participate in fair business dealings, none have chosen to do so,” Huffaker said. “Those choices, along with the actions of the Idaho Legislature, send a clear message: Don’t do business with Idaho.”

“All of us — citizens and businesses alike — should be concerned,” Huffaker said.

The Idaho Attorney General’s Office, which represented the Idaho State Board of Examiners in the lawsuit, said it was “pleased the court agreed with our argument.” The three-person board examines claims against the state and comprises Gov. Little, Attorney General Raúl Labrador and Secretary of State Phil McGrane.

Court says developers suffered ‘palpable injury’ …

The Supreme Court did not decide whether the legislation was constitutional or not. Rather, the court ruled against the developers because they had failed to show they had a legal standing to sue since they did not have a legal right to the property.

“The petitioners failed to demonstrate an interest or injury that is sufficient to establish standing to invoke this court’s original jurisdiction,” according to the opinion. “Because petitioners have failed to meet this threshold requirement, we do not reach the questions of whether the appropriations bills violate the Idaho Constitution.”

The court did say that the developers had demonstrated “a distinct and palpable injury” and that there was a causal connection between the legislation and the failure of the sale to go through.

“None of the parties dispute that the appropriations bills have halted the sale of the ITD campus,” according to the ruling.

… but says it can’t order the property’s sale

But the court found that the Department of Administration, which was handling the campus sale, had no obligation to sell the property to Hawkins, The Pacific Cos. and FJ Management as the department had never signed the purchase and sale agreement before the Legislature passed the budget bills canceling the sale. The court said the developers had admitted that the Department of Administration has discretion about whether to sell the property.

“This court cannot issue a writ compelling them to sell the property to (the developers),” the justices wrote.

The court also said the developers failed to show that their injuries would be addressed if the court were to rule against the legislation.

“There is no substantial likelihood that a favorable decision by this court will redress (the developers) injury,” according to the ruling. “It is entirely speculative that granting either of the requested writs will result in a sale of the ITD campus, much less a sale to (the developers).”

The court also said that others, including the Department of Administration and ITD, could have challenged the unconstitutionality of the budgets bills, but they did not.

“To be clear, our opinion today does not decide whether the legislature exceeded its constitutional authority in passing the appropriations bills,” the justices wrote. “It also does not decide whether a party with standing would be entitled to the requested writs. Our decision is based solely on our conclusion that (the developers) do not have a legally enforceable right to purchase the ITD campus and as a result, they do not have standing to file this action.”

House Speaker Mike Moyle, R-Star, headed much of the opposition against the sale. Moyle has a long history of opposing urban renewal and was added to the case as an intervenor.

The redeveloped site would have fallen within the boundaries of one of the urban renewal districts created by the Boise City Council and administered by the city’s urban renewal agency, the Capital City Development Corp. Additional taxes from increases in property value in urban renewal districts go to the agency, which uses the money to fund more development and infrastructure improvements.

Moyle did not immediately return a call requesting comment.

Huffaker said the ruling is a loss for the state and for free markets.

“We continue to believe any review of the unchecked actions of the Idaho Legislature would have found them to be illegal,” Huffaker said. “We now hope the taxpayers hold legislators and state leaders accountable for lost revenue and opportunity stemming from their unprecedented interference with the free market.”

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