Idaho AG Raúl Labrador retracts arguments in ITD campus lawsuit after rift with Gov. Little

Conflict over the state’s sale of the Idaho Transportation Department’s 44-acre campus in Boise continued in new legal filings Friday, when the Attorney General’s Office asked that the Board of Examiners retract previous statements made by its attorneys and that the board be removed from the case.

The state of Idaho, another party in a lawsuit filed by developers in the Idaho Supreme Court, also requested to update its original brief after new filings raised “new issues and arguments, and the state of Idaho has not had the opportunity to address them.”

The lawsuit boiled up after the Idaho Legislature revoked the sale of a Transportation Department building to three developers, Boise-based Hawkins Cos., the Pacific Cos. and Utah-based FJ Management, who planned to redevelop the mostly vacant and flood-damaged campus for $51.8 million.

After developers sued the Board of Examiners, Department of Administration and Transportation Department, and called the Legislature’s actions unconstitutional, the Attorney General’s Office submitted an initial filing May 15 on behalf of the Board of Examiners, which examines claims against the state. The state attorneys argued that the state no longer wanted to sell the property and the court could not force them to sell it.

But Idaho Gov. Brad Little and Secretary of State Phil McGrane, who make up two of the three members of the board, were not briefed on Attorney General Raúl Labrador’s initial legal briefs before they were filed with the Supreme Court, their spokespersons have told the Statesman. Labrador’s office has maintained that the officials’ legal staff had been informed about the direction he planned to take.

Little and McGrane overruled Labrador, the third member of the board, at an emergency Board of Examiners meeting last week and voted to proceed with an altered “legal direction” after a more than 30-minute private executive session. Labrador voted against it.

Friday’s filing that rescinded Labrador’s initial brief and asked to remove the Board of Examiners from the lawsuit is intended to “clarify the very ministerial role of the board,” Little spokesperson Emily Callihan told the Statesman by email.

Idaho House alleges collusion

State administrative facilities, such as the Transportation Department campus, can go up for sale to private buyers when classified as “surplus” property. The Board of Examiners takes control of the property and hands it off to the Department of Administration, which then notifies all other state agencies that the property is available. If no agencies decide to take over the property, the Department of Administration can sell it.

The developers said they believed the sale was virtually a done deal. But during this year’s legislative session, Republican lawmakers took issue with the deal and narrowly wedged through two budget bills at the end of the session that revoked the Department of Administration’s ability to sell the property.

The developers in a lawsuit filed April asked the Idaho Supreme Court to intervene before the budgets go into effect on July 1. The court has scheduled oral arguments for August.

The Attorney General’s Office argued in a filing for the Board of Examiners that “the court should not force the state to sell property it no longer wants to sell and is not obligated to sell.”

But around the time of the filing, Little selected Joan Callahan, of Boise’s Naylor & Hales law firm, to act as attorney for the Department of Administration and Transportation Department. In her filing, Callahan took a different strategy from Labrador and – in many ways – argued against the Legislature’s actions by contending that the budget bills violated the state’s constitution.

The Idaho Supreme Court approved adding House Speaker Mike Moyle, R-Star, and the Idaho House as parties to the case. The House and Labrador have since argued that the executive branch was colluding with the developers and that the move undermined them.

“This case is an effort by private interests, aligned with certain elements in the executive branch, to interfere with the Legislature’s ability to set fiscal policy for the state,” wrote Mark Hilty and Daniel Bower, of Nampa law firm Hilty, Bower, Haws and Seable, on behalf of Moyle.

“The House is disturbed by what appears to be attempts in the executive branch to deprive the state of a defense in this case,” the attorneys wrote.

Developers respond to filing by Idaho AG

The developers last week filed a response to Labrador’s initial filing for the Board of Examiners and asked the Idaho Supreme Court to reject the filing and verify claims it made.

The filing argued that the state and Board of Examiners’ response was based on the incorrect premise that no sale agreement was negotiated and that the state no longer wanted to move forward with the sale.

The responses “not only lack factual credibility but misportray the actual legal standards and should be disregarded,” wrote Hethe Clark, of Boise’s Clark Wardle law firm, on behalf of the developers.

The developers rejected the House’s allegation that there was collusion between the executive branch and private interests.

Clark wrote that “if there has been collusion, petitioners must be really terrible at it,” since they had participated in a competitive bidding process and agreed to pay $14 million over the state’s appraisal of the property and had negotiated with deputy attorneys general for nearly six months before getting to a negotiated form of purchase agreement.

The developers also “failed to receive support in the form of a veto … from the Governor’s Office; and watched as the Attorney General’s Office appeared and filed an inaccurate answer on behalf of the (Board of Examiners) that went against petitioners’ interests,” Clark wrote.

“There is and was no collusion,” Clark wrote. “Suggestions otherwise are an improper attempt to taint the proceedings.”