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State of Idaho looks to buy Hewlett-Packard campus

Hewlett-Packard started building its Boise campus in 1975. File photo.

Hewlett-Packard’s Boise headquarters. The California-based company started building its Boise campus in 1975. If HP sells its campus to the state, the company will remain in place and lease back some space for an initial seven-year term. File photo.

The Idaho Department of Administration awaits legislative approval to purchase the 197-acre Boise campus of Hewlett-Packard Co., which started building its Five Mile Road/Chinden Boulevard campus in 1975.

Hewlett-Packard will remain in place and lease back for an initial seven-year term 793,000 square feet of the total 1.346 million square feet in eight buildings. The state plans to first move the Idaho State Tax Commission into one 152,000-square-foot building that has been vacant at least five years, and later bring in numerous other state agencies using leased space around Ada County, said Linda Miller, a leasing manager for the department.

The Legislature on March 16 was considering a concurrent resolution authorizing the Department of Administration to negotiate the $110 million purchase with HP.

Hewlett-Packard emerged as the chosen proposal from 46 respondents to an Oct. 21 request for proposals. The state was looking for between 110,000 square feet and 600,000 square feet to house state agencies that are now at Washington Group Plaza and other space.

State officials evaluated nine proposals before settling on HP, Miller said.

In December, Miller had said she was considering leasing or purchasing office space or building a new campus if an interested developer stepped forward. The HP proposal initially offered for lease vacant space, but evolved into an outright sale of the entire campus, Miller said.

“We were directed to focus on a permanent home for state offices,” Miller said. “It’s cheaper to buy a product that is existing than to build a new campus.”

The state now leases more than 800,000 square feet of office and warehouse space in Ada County at an annual cost of $12.2 million. As leases near expiration, the state will consider relocating offices to the HP campus, Miller said.

Once Administration gets approval to negotiate a purchase, the Idaho State Building Authority will do an “enormous amount of investigation” of the property before considering selling an estimated $126 million bond to purchase and renovate the property, Miller said.

The tax commission could conceivably move in by the end of the year. Its lease expires August 2018 at Washington Group Plaza, which St. Luke’s Health System is under contract to buy.

The state would assume third-party leases with other tenants on the campus but the state anticipates increasing its HP presence to 366,000 feet in 2020 as those leases expire.

A second piece of legislation will amend Idaho Code 67-5708 to allow the Department of Administration to accept the existing third-party leases.

“This opportunity for an agreement with a valued business leader will benefit both parties and addresses a pressing need for the state of Idaho,” Gov. C.L. “Butch” Otter said in a news release. “We’ve been looking hard for the right place at the right price for our agencies, and the HP campus really fits the bill. A great employer is reinforcing its commitment to Idaho and the state is saving money, so it’s a win-win.”



About Teya Vitu

Teya Vitu is an Idaho Business Review reporter, covering commercial real estate, construction, transportation and whatever else may intrigue him in the moment. Join me on Twitter at @IBR_TeyaVitu.