Lawsuit over ITD headquarters sale highlights rift between Idaho Gov. Little, AG Labrador

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A dispute over the sale of state property in Boise has inflamed an ongoing feud between Gov. Brad Little and Attorney General Raúl Labrador over Labrador’s role as the state’s top lawyer.

After Labrador’s office responded to a lawsuit filed by a set of developers against the state, tensions between the two offices this month prompted the governor to substitute an outside private attorney for the attorney general’s lawyers.

Three developers who arranged to purchase the 44-acre Idaho Transportation Department campus on State Street in Boise and turn it into a large mixed-use development sued the state in April after the Idaho Legislature took the matter into its own hands and nixed the deal. The developers’ lawsuit called the Legislature’s actions unconstitutional and asked the Idaho Supreme Court to quickly intervene to reverse it. The lawsuit was also filed against the Board of Examiners, which examines claims against the state, the Department of Administration and ITD.

The Idaho Supreme Court has scheduled oral arguments for August, after the new laws to revoke the deal are scheduled to go into effect on July 1.

As the attorney general, Labrador generally represents the state’s legal interests in court. He’s also one of three voting members of the Board of Examiners, along with Little and Secretary of State Phil McGrane. In an initial May 15 filing on behalf of the state, Labrador’s attorneys had argued that the Idaho Supreme Court could not force the state to sell property it no longer wants to sell, and that the court does not have jurisdiction to rule on the constitutional question.

“The court should not force the state to sell property it no longer wants to sell and is not obligated to sell,” wrote Alan Hurst, solicitor general for the attorney general’s office in a filing.

But two days after Labrador’s filing, Little designated Joan Callahan, an attorney with Boise firm Naylor & Hales, to represent ITD and the Department of Administration in the lawsuit after consulting with Labrador, according to a letter from Little. Callahan on Wednesday notified the court that she would be representing the two agencies going forward.

Callahan’s argument, submitted on Wednesday, differed markedly from the attorney general’s: She argued that the recent budget bills conflict with general state property law, which have put the two agencies in a difficult position. Trying to revoke the campus sale in a budget bill was a “hallmark” of a violation of the state constitution’s requirement that bills have a single subject, she wrote.

She noted that because the ITD campus was previously declared “surplus property,” it was transferred to the Department of Administration to dispose of. Since the budget bills that revoke the sale are only active for one fiscal year, it is unclear what would happen to the property once the next fiscal year ends next summer.

Unless the court rules on the new laws’ constitutionality, the agencies will be left “to contend with uncertain, incongruous and revolving legal mandates.”

Little disputes Labrador’s legal arguments

According to Little’s office, the attorney general’s initial responses were not vetted by the rest of the Board of Examiners.

“The governor has learned that a brief and answer were filed on behalf of the Board of Examiners in the lawsuit before the Idaho Supreme Court,” spokesperson Madison Hardy said in an email. “The filings were neither presented to nor approved by the board prior to filing.”

McGrane “did not become aware of the suit until after the filing had been made” and hopes the board is removed from the lawsuit, a spokesperson for McGrane, Chelsea Carattini, told the Statesman in an email. Carattini declined to clarify the timeline further.

The Board of Examiners, which were briefed on the legal matter Tuesday, and had another executive session about the lawsuit Friday but took no public action.

The attorney general’s office has disputed Little’s characterization of the legal affair and said that Labrador’s and Little’s staff had discussed the legal arguments Labrador’s office planned to present before they were filed.

Dan Estes, Labrador’s spokesperson, told the Statesman that the attorney general was given two weeks to respond to the lawsuit, which the governor’s office was aware of. The Board of Examiners, which Little chairs, did not have its regular monthly meeting scheduled during that timeframe.

“He was informed of our legal strategy at least one week before the brief was due,” Estes said. “As the chair of the Board of Examiners, the governor had ample opportunity to call a special meeting but failed to do so. Similarly, he could have vetoed the legislation that triggered the lawsuit. It’s curious that his office is trying to blame the Office of the Attorney General for the governor’s failure to act promptly on his desired policy outcomes.”

Idaho Legislature cancels ITD HQ sale

State leaders had planned for two years to relocate ITD’s headquarters to a state complex on Chinden Boulevard, and the Department of Administration — part of the executive branch — accepted bids for the property last year. Boise-based Hawkins Cos. and The Pacific Cos. and Utah-based FJ Management submitted the highest bid of $52 million and were announced as the winners in September.

But before a final contract could be signed this spring, lawmakers worked to reverse course and inserted language that revoked the sale into budget bills for ITD and the Department of Administration. Supporters of the effort to cancel the deal — including House Speaker Mike Moyle, R-Star, who intervened in the lawsuit — said it would cost Idaho more to proceed with the sale and relocate the state agency’s headquarters building, which also includes offices of the Idaho State Historical Society.

Opponents countered that millions have already been spent preparing for the move, said the proposed budget bills violated the Idaho Constitution by putting policy directives into appropriations, and feared reneging on a pre-arranged deal would hurt the state’s reputation. Senate President Pro Tem Chuck Winder, R-Boise, called the effort to undo the sale “so far out of line.”

“This is a hill I want to die on if I have to,” Winder said during debate at the Capitol.

The deal became an inflection point of this year’s legislative session. In the waning days of the session, the Senate rejected one of the budget bills that would have revoked the sale and sent it back to the budget committee. But a few senators relented days later and passed a new, nearly identical version in a close vote. Winder, a 16-year veteran of the Senate, lost his primary re-election bid Tuesday in a major upset.

Little did not sign the two budget bills but did not veto them either, allowing them to become law. In a letter to lawmakers, he wrote the reversal would cost more money and “unfairly cancels an agreed upon sales process, causing future reputational risk for the state.”

Not a ‘yes man,’ Labrador promised

The attorney general is required by law to represent the state, including state agencies and officials, in most legal matters. His office can also provide legal counsel to the Legislature if requested.

But the attorney general is himself an elected official who sits on several state boards — a structure that raises questions about conflicts of interest. In some instances, state law tasks the attorney general with representing state agencies while at the same time enforcing the laws those agencies must follow.

That structure has also raised concerns for lawmakers, who this year enacted a law to remove the attorney general’s office from its role representing the Idaho Department of Lands. The department is connected to the state Land Board, of which the attorney general is a member.

Senate Majority Leader Mark Harris, R-Soda Springs, who sponsored the bill, feels the current law “gives the office of the AG a foot on both sides of the fence,” Harris said. “I think there should be some degree of separation.” He provided an example of a disagreement under the previous attorney general, Lawrence Wasden, when a lawyer employed under Wasden to represent the Department of Lands thought a law about mineral leases, passed by the Legislature, was unconstitutional.

In 2019, Wasden also investigated the Public Charter School Commission, a commission his office represented, for an open meeting law violation.

A provision of Idaho law grants the governor authority to request to have different representation or even an outside attorney when he believes the attorney general’s provided lawyer is ineffective.

Since he became attorney general last year, Labrador has clashed in instances with state agencies he is tasked with representing. Labrador initiated investigations of child care grant programs at the Department of Health and Welfare, which resulted in litigation. The attorney general also sued the State Board of Education, another client, over concerns he had about its closed-door discussions to approve the University of Idaho’s purchase of the University of Phoenix.

Labrador campaigned against Wasden by promising to not be a “yes man” for Little.

The attorney general has maintained that the Legislature has given him conflicting duties, as both a representative of state agencies and an enforcer of state laws. His challenge against the State Board of Education was over the state’s open meetings law. If he as attorney general can’t enforce the open meetings law, “who else is going to do it?” he told a Senate committee in February.

Little and Labrador butted heads last year, too, when documents showed the attorney general’s office had decided to join one Texas lawsuit challenging federal water authority and not another West Virginia one without first informing the governor, according to reporting in the Associated Press. The Texas lawsuit scored an early court victory weeks after Labrador joined it, which was later cited in a similar injunction in the West Virginia case.

Reporter Nick Rosenberger contributed.