Posts tagged: Priest Lake
At yesterday’s auction of state-owned Priest Lake cabin sites at the Coeur d’Alene Resort, many in the crowd were wondering if the state really was getting a better deal for the state’s schoolchildren – the beneficiaries of the Priest Lake state endowment lands – by divesting itself of the cabin sites. The 59 cabin-site renters are currently being charged rent at 4 percent of appraised value for the ground under their cabins, which came to a total this year of $1,070,857.
Last night, the state endowment’s take from the auction was $26,903,812. That’s more than 25 years’ worth of rent that it collected in a single night, at today’s rental rates. In the past year, the rent collected on the properties was actually significantly less, somewhere around $700,000, as the appraisals, on which the rents are based, were still in the process of going up. At that rate, last night’s take from the auction was a little over 38 years’ worth of rent payments.
As far as what Idaho’s endowment does with cash, its permanent endowment fund – the cash – is invested in the market and last year made a whopping 18.8 percent return. In the past five years, the cash fund has made an average of 14.7 percent a year; in the past 10 years, the average gain was 8.5 percent. Looking ahead, fund managers predict an average annual gain of 6.5 percent.
Aside from the cash, the state endowment’s biggest money-maker is its timber land. Last year, a record-high timber harvest of 347 million board-feet resulted in $53.5 million in profits for the endowment; the increased harvest was due in part to salvage logging of trees damaged by wildfires and insects. All cottage site rents statewide – the state started the year with 354 lakefront cabin sites at Priest Lake and 167 at Payette Lake, but has started selling them off now – came to a net of $4.2 million. Grazing land pulled in a paltry $775,000 after expenses. Oil and gas leases brought in $1.066 million for the endowment, a relatively new revenue source.
Idaho has now sold 95, or almost one-fifth, of its 534 cottage site lots at Priest Lake and Payette Lake. Plans call for another 36 lots at Payette Lake to be auctioned later this year, with the idea of shifting to assets with a better rate of return for the endowment.
Idaho Secretary of State Ben Ysursa called the Priest Lake auction “a step in the right direction for the state of Idaho,” saying, “We’re implementing a decision of the Land Board to the benefit of Idaho’s public schools while providing resolution for many families eager to move on from leasing the land beneath their homes.”
People are filtering in to the Coeur d’Alene Resort ballroom where today’s auction of 59 cabin sites at Priest Lake is set to kick off at 1 p.m. Pacific time. Steven Hubbs, 68, who’s here to bid for the ground under the lakefront cabin he’s had for the last 15 years, is among the bidders looking through a thick packet of information on the various cabin sites. Asked what he thinks of the process, Hubbs, who lives in California, said, “It seems fair. I think a lot of the older people that have owned cabins on the lake for a long time, I think they’re at a disadvantage – I don’t think they’re being treated fairly. But for people who bought recently, I think it’s fair.”
I’ve spoken with several other cabin-site lessees who weren’t willing to talk on the record, and are visibly angry over the process. The starting price for the lots, which is set at the appraised value, ranges from $200,000 to $665,000. If someone other than the existing lessee gets the high bid, that person would also have to pay the existing lessee appraised value for the improvements on the land, including the cabin.
The growing crowd here includes some who are here just to watch, including some who also have Priest Lake cabins on state ground but aren't up for auction today.
With a complex auction coming up Thursday for 59 state-owned lakefront cabin sites on Priest Lake, the state Department of Lands has released a fact sheet about how the whole thing will work; you can see it here. Among the highlights: The 59 lots – down from the 62 announced in July, as several have dropped out – have been divided randomly into four groups, with a quarter assigned to each, and groups have been scheduled for auction at 1 p.m., 3 p.m., 5 p.m. and 7 p.m. Each group is expected to take less than an hour.
Anyone who’s not the existing lessee and wants to bid on one of the lots must submit a $50,000 cashiers check ahead of time; if that person is the successful bidder, that $50,000 will be credited against the cost of the improvements on the property, for which the winning bidder must pay the existing lessee at appraised value. Existing lessees don’t have to put up the $50,000 because they already own the improvements. There also are various fees that the winning bidder will have to pay.
The auction, which follows two earlier ones of state-owned cabin sites at Payette Lake, comes as the state Land Board has decided to get the state out of the business of renting lake lots on which people build and own their cabins, leading to years of battles about the appropriate fair-market rent to charge for the ground under the cabins. It’s the first of what’s expected to be a series of auctions for Priest Lake lots. Proceeds from the auction will go to Idaho’s public school endowment fund. This initial group consists of lots whose lessees had attempted to join land exchanges that were cancelled; they voluntarily agreed to the auction instead.
The auction will be for the lots, not including the value of the buildings on them. Starting bids are set at the appraised value, which ranges from $200,000 to $665,000. Information on all the properties is online here; the terms and conditions of sale are online here. The auction starts Thursday at 1 p.m. Pacific time at the Coeur d’Alene Resort.
Here’s a news item from the Associated Press: SANDPOINT, Idaho (AP) — An Idaho judge says the state can use its most recent appraisals to set lease payments and minimum bids for the sale of cabin sites around Priest Lake. A group of more than 70 lessees sued the state in April seeking to bar it from using the higher appraisal amounts. The lessees argued they had a constitutionally protected property right to renew their cottage site leases. The Bonner County Daily Bee reports (http://bit.ly/V7IkUY) District Judge Barbara Buchanan ruled Friday that the Supreme Court has made it clear the Idaho Constitution prohibits recognition of any property right in a lease of state endowment land. The court also ruled the state is obligated to manage the property for maximum long-term returns to the endowment's beneficiaries, including public schools.
You can read Buchanan’s full ruling here. Idaho Department of Lands spokeswoman Emily Callihan said the ruling leaves the department free to continue with its plans to sell a group of the cabin sites at public auction in late August, with the disputed appraisals serving as the minimum bid price.
Seventy-six cabin owners on Priest Lake who rent the land under their cabins from the state of Idaho have filed a lawsuit, charging that the state is claiming ownership of improvements including access roads, utility lines and more that the renters actually installed with their own money. As a result, the latest appraisals for the state-owned cabin sites – which will be used both as minimum bids for possible public auctions and as the basis for future rents for continuing leases – have ballooned by up to 80 percent, they charge, pushing them out of many lessees’ price range.
“The appraisals are objectively wrong,” the cabin owners argue in court documents; they’re seeking an injunction to stop the state from using the new appraised values, and return to last year’s values plus a 1.6 percent inflationary increase. But the state says that would mean a loss to the state’s endowment, which benefits public schools, of nearly $2 million next year. You can read my full story here at spokesman.com.
On unanimous votes, the state Land Board has agreed to offer the 74 cabin site renters at Priest Lake and the 21 at Payette Lake who had been signed up for now-cancelled land exchanges an opportunity to go to public auction on their lots; you can read my full story here at spokesman.com. The Payette Lake auction likely will be held in late February in Eagle; the Priest Lake lots will be auctioned at the Coeur d'Alene Resort on two dates to be set before the end of the summer, and will be subject to new 2014 land appraisals that are now in progress.
“We have ready, willing and able buyers,” said Kathy Opp, deputy director of the state Department of Lands. “We believe the endowments could benefit from another voluntary auction cycle that captures current buyer interest while motivation is high.”
The state would be guaranteed to get at least the appraised value for the lots, which would be the minimum bid. If someone other than the current lessee for the land was the successful bidder at the auction, they would have to pay the current lessee appraised or assessed value for the improvements, including the buildings on the property. When the state held a similar auction for 13 Payette Lake cabin sites in October, all 10 that had current lessees went to those current lessees; the other three were vacant, unleased lots.
A real estate auction firm that ran a successful auction of 13 state-owned cabin sites at Payette Lake in October is recommending that the state consider another big auction for cabin sites at both Priest and Payette lakes, with the Priest Lake cabin-site auction to be held at the Coeur d’Alene Resort. “It’s a nationally recognized venue,” Brian Rallens of Bottles Corbett Real Estate told the state Land Board this morning, and would draw attention to Priest Lake, “really a gem that’s not that well-known.”
Owners of dozens of cabins on state ground at the two lakes had been signed up for land exchanges, designed to swap the state-owned sites for higher-yielding commercial property while letting the cabin owners buy the ground under their cabins, but the exchanges were canceled amid legal questions. Those cabin sites would be good candidates for another auction, Rallens said. “Really the best time to sell is when you’ve got buyers,” he told the board – buyers who have already lined up financing and had been ready to move. “At the end of the day we really feel that there’s an opportunity for a fiduciary benefit for the endowment.”
With the turmoil and uncertainty revolving around the state lots at Priest Lake, as many as 30 percent of the current lessees may default, as they face steep increases in their rental rates for the ground under their cabins, Rallens said. That would force land values there down and saturate the market with vacant properties, he said.
At Payette Lake, 10 of the lots that were placed on the auction block already had lessees who had built their cabins on the lots and were leasing the ground from the state; all 10 of them were the successful bidders, with all but one purchasing the lots at their appraised value. The 10th one sold for $11,000 over its appraised value. At the same time, three vacant, unleased lots were auctioned, and they went for well over the appraised values: $1 million for a lot that was appraised at $662,400; $620,000 for one appraised at $585,000; and $1.1 million for one appraised at $1.066 million.
“It will drive prices up over time,” Rallens said. “Especially at Priest Lake we feel it’s an opportunity to preserve values.” He said, “From an expectation standpoint, I would say most will probably sell for appraised value.”
The Land Board is scheduled to vote later today on proposals to hold voluntary auctions in the coming months on 74 lots at Priest Lake that had been scheduled for land exchanges, and 21 at Payette Lake. Anyone could bid; if someone other than the current renter won an auction, the winning bidder would have to pay the current renter appraised value for the improvements.
A North Idaho judge has ruled against a family that challenged the auction of its state-owned leased cabin site at Priest Lake, saying cabin owners who rent their ground from the state have no right to continue their leases or to appeal their appraisals prior to a conflict auction. The opinion issued by 1st District Judge Barbara Buchanan doesn’t mention the oddest part of the case – that the remains of five of the family’s ancestors, dating back nearly a century, are interred on the cabin site, and permanent memorials to the five are located there.
Spokane attorney J. Scott Miller said that turned out to be more of emotional issue than a legal issue in the case. “I’m surprised it wasn’t an issue for the individual who bid against the family,” he said. “But … really there’s no legal grounds that I’m aware of.”
Buchanan found that cabin owners have no right to continue their leases once they expire. “The plain terms of the 2012-2013 lease provided that any renewal of the lease was entirely at the discretion of the Land Board,” she wrote. Plus, she found, “Even if the lease could be construed to provide a right of continuation past the expiration of the lease, such right is unenforceable as a matter of law given the Idaho Supreme Court’s recent determination that the Idaho Constitution prohibits the Board from offering a lease renewal to a cottage site lessee without first making the lease available for public auction.” You can read my full story here at spokesman.com.
Two Priest Lake cabin owners were outbid for their leases on the state land under their Idaho cabins on Thursday - including one who has at least five ancestors' remains buried on the site. The family is hoping to overturn the results of the auction through its pending lawsuit, and their Spokane attorney said he was surprised the state went ahead with the auction; state lands officials said there was nothing legally to stop it.
“Because there was no injunction filed, there was nothing that would preclude it moving forward,” said Idaho Department of Lands spokeswoman Emily Callihan. “We have a legal obligation to put expiring cottage site leases up for advertisement. If somebody other than the current lessee emerges who’s interested in acquiring that, we have to hold the auction.” You can read my full story here at spokesman.com.
Two Priest Lake cabin owners have been outbid for the right to keep their leases on the state land under their lake cabins, meaning they’ll lose them, and the successful bidders will have to pay them for the appraised value of the improvements. Denver resident Peter Mounsey was the successful bidder for a cabin site that had been held by Jan Nunemaker in the Powerline subdivision; he bid $2,000, while she bid only the minimum $1,000 to keep the lease. Mounsey will have to pay Nunemaker the $38,500 appraised value of her cabin. He also had to pay the first year’s rent for the ground, $22,880, to the state in advance.
In the other auction, James Hollingsworth outbid relative Graham Sharman in a bidding war over a cabin site in the Pinto Point subdivision; Hollingsworth’s winning premium bid was $30,000 to secure the lease. Hollingsworth will have to pay Sharman the $132,000 appraised value of the cabin; the annual rent for the ground underneath it is $21,720, which Hollingsworth was required to pay the state in advance.
A third conflict auction also was held this week for a cabin site at Payette Lake in McCall; there, too, the current lessee was outbid. Brady Peterson of Eagle won that auction with a premium bid of $6,000, after current lessee and Oregon resident Michele Cahill stopped at $5,000. In that case, the improvements were found to have zero value, so Peterson won’t have to pay Cahill. He paid the first year’s rent of $920 to the state in advance; the lot, in the Agate subdivision, isn’t on the lakefront like the Priest Lake sites.
Land exchanges designed to let a fifth of the lake cabin owners at Priest Lake get ownership of the land under their cabins – while trading the state higher-yielding commercial property – are likely dead, mired in legal and political problems; you can read my full story here at spokesman.com. “We share the angst and frustration of the lessees, the board does,” Idaho Secretary of State Ben Ysursa said after the state Land Board held an hour-plus closed-door session on the situation Tuesday, but took no action. Last month, the board abruptly rejected two major land exchanges involving lots at Priest and Payette lakes, after a handful of legislators and local officials raised legal and political questions about the moves.
A subdued Tom Schultz, director of the state Department of Lands, said, “The board did not take any action to reconsider the ones that weren’t approved. My understanding is that legally, auctions are the most defensible route forward.” Legal issues raised about exchanges, he said, likely require some clarification from the Legislature.
The state’s been working to get itself out of the business of renting lakefront lots on which the renters build their own cabins; the nearly century-old practice has led to years of lawsuits and protests over what constitutes fair rent in that situation. Proceeds go to the state’s endowment, which largely benefits Idaho’s public schools.
Idaho's state Land Board has rescheduled its special meeting, originally set for yesterday, to Nov. 12 - next Tuesday - at 10:30 a.m. in room WW53 of the state Capitol. The agenda is identical to the one posted for yesterday's cancelled meeting: Extending cottage site leases on Priest and Payette lakes for one year at current rates, and an executive session on potential litigation related to the cottage sites.
Idaho’s state Land Board had been scheduled for a special meeting this afternoon, but now it’s been canceled. The reason: Attorney General Lawrence Wasden raised concerns about inadequate notice of the meeting; it likely will be rescheduled soon. There were only two items on the agenda: Extending all state-owned lake cabin site leases now scheduled to expire on Dec. 31 for one more year at current rates, allowing time for re-appraisals of land values; and an executive session on potential litigation related to cabin sites.
Last month, the Land Board unexpectedly rejected two major land exchanges intended to swap cabin sites at Priest and Payette lakes for commercial property in southern Idaho, potentially doubling the proceeds to the state endowment. The state’s been working to get itself out of the business of renting lakefront lots on which the renters build their own cabins; the nearly century-old practice has led to years of lawsuits and protests over what constitutes fair rent in that situation.
But the two big swaps were questioned by a handful of state lawmakers and local officials, who noted among their concerns that their counties would lose property taxes on the commercial land when it switched to state ownership, and ideological opposition to the idea of the state owning commercial property, on grounds that the state shouldn’t compete with private business.
However, the state endowment, which operates as a trust, long has owned commercial timber and grazing lands on which it’s issued leases, and in recent years has increasingly expanded into other types of property investments, including office and commercial buildings; its constitutional mandate is to bring in the maximum long-term financial return for the trust’s beneficiaries. The state still could bring back up the land exchanges, but at this point, the prospects are unclear.
Idaho’s state Land Board has voted to reject all three proposed land exchanges, at least for now. The swaps sought to exchange state-owned cabin sites on Priest and Payette lakes for commercial property in Idaho Falls and Nampa. Attorney General Lawrence Wasden first moved to delay consideration of the exchanges, based on concerns raised today by state legislators and local officials, to allow more review, and also to allow the cabin site lessees involved a chance to get their appraisal values reviewed, something they waived to get into the exchanges. But then state schools Supt. Tom Luna said he wanted to split the questions, because he favored moving forward with the Idaho Falls exchanges, but not the Nampa one.
“I have concerns about the predicament that we have put any number of individuals in that have been, at least in my opinion, following this board’s lead as we’ve moved toward this exchange today,” Luna said. “I understand that people have given up their right to appeal their appraisals, we’re going to address that. But I think at best that’s a Band-Aid to the predicament that we’ve put them in. … Although I have strong issues with acquiring commercial properties and I’ve expressed those before so I won’t say it again … this board has already decided that this is a path we would go down and people followed us down that path,” he said.
But he was the only one to vote in favor of a motion to proceed with the two Idaho Falls exchanges; it died on a 4-1 vote. The Nampa exchange then was rejected by a unanimous vote, and a motion to allow involved cabin-site lessees to get their appraisals reviewed passed unanimously.
Click below for a report from AP reporter John Miller.
Before this morning’s Land Board meeting, Eye on Boise queried board members about the upcoming conflict auction of a Priest Lake cabin site that includes generations of human remains from the extended family that’s had its cabin on the state-owned property there, under a state lease, since 1933.
“That’s our property,” said Secretary of State Ben Ysursa. “We had no idea, but conflict auctions are conflict auctions.”
Gov. Butch Otter said he didn’t know about the remains. “We’ll have to have to make sure this doesn’t become issue for confiscation,” he said. Attorney General Lawrence Wasden noted that the state hasn’t yet been formally served with the lawsuit over the auction. “We’ll take a look at it once we receive the documents,” he said.
The Starlin family stands to lose a lot more than the lake cabin their great-grandfather hand-built on leased state land back in 1933 when Idaho auctions off the parcel next month. They could be leaving behind generations of family members whose remains have been buried there, too.
Marissa Olsson still remembers the moving ceremony in which 30 extended family members shared memories of her grandmother, then each placed a handful of her ashes in a spot that held special memories of her; she took hers to the beach where she made her grandma mud pies, and her grandma obligingly pretended to eat them, a spot the two had dubbed the “Priest Lake Cafe.” Now, the family’s modest cabin is one of four set for conflict auctions next month, and the family has filed a lawsuit against the state of Idaho challenging the process, joining another cabin owner also facing a conflict auction.
After an Idaho Supreme Court decision last summer overturned a state law protecting cabin leases from conflict auctions, bids were solicited. Three Priest Lake cabin sites and one at Payette Lake drew conflict bids, meaning someone else wants to bid against the existing cabin owner for a chance to take over the lease. If the outsider wins the bid, the existing cabin owner must be paid for the value of their improvements at the appraised price.
Among the concerns raised in the lawsuit: Though the state is allowing every other cabin owner at Priest Lake a shot at a new appraisal for their cabin site, after the latest ones were challenged as inaccurate, those facing conflict options weren't allowed to object; they also weren't allowed to join land exchanges to try to get ownership of their cabins before the conflict auction. Appraisals determine the yearly rent that cabin-site lessees pay; the family’s rent for the site in question was $7,223 in 2011; it’s proposed to go to $22,880 next year.
But the most eye-catching item in the lawsuit, filed late last week in Bonner County, is the human remains. The cabin site is the final resting place not only for Olsson’s grandmother, but also for her great uncle, her step-grandfather, and two cousins, including a little girl who was stillborn in 1939. Permanent memorials to all five are located on the site. “The whole family is very upset about it,” said Olsson, now an attorney in Seattle; her aunt, Jan Nunamaker, holds the lease now. State Lands Department Deputy Director Kathy Opp said Monday that she knew nothing about the human remains and hadn’t yet seen the lawsuit; you can read my full story here at spokesman.com.
Idaho has dropped plans to auction off three undeveloped lakefront cabin sites on Priest Lake this summer, and instead will look at possibly auctioning up to three other lots on the lake next year. “Those three were not the ideal locations, after on-site review,” Thomas Felter, the state Lands Department’s manager of commercial and residential real estate, told the state Land Board this morning. Plus, he said, the department’s appraiser said it would take six to 12 months to properly market lakefront lots for auction.
The auction, initially planned for August or September, was designed to give the state a better sense of the true market value of bare lots on the lake, as it moves toward trading away or auctioning off existing cabin sites on the lake. You can read my full story here at spokesman.com.
Idaho will auction off three new undeveloped cabin sites on Priest Lake this year, partly to get a sense of the true bare-land values as the state moves toward divesting itself of the numerous state-owned lots there on which renters have built and owned cabins for years. The state Land Board approved the auction plan this morning; the auction will take place in late August or early September. The three lots, all contiguous and lakefront, will be marketed nationwide.
“Although historically there have been 354 cottage sites associated with Priest Lake, an additional 17 have been platted and are unleased and undeveloped at this time,” Thomas Felter, the state Lands Department’s manager of commercial and residential real estate, told the board, which consists of the state’s top elected officials. “We believe a sale auction would help determine the market value for vacant and unimproved lots.”
The state had planned to allow some voluntary auctions of existing cabin sites this year where the lessees wanted to go that route – and perhaps bid against competitors to keep their cabin sites, or get paid for their improvements if a competitor won the bidding - but the need to reappraise all the existing sites has slowed that process down. Felter said none of the existing Priest Lake cabin sites will be ready for voluntary auctions before 2014; you can read my full story here at spokesman.com.
Priest Lake cabin owners who object to new Idaho appraisals that showed the state-owned land under their lake homes ballooning in value this year by an average 84 percent can request new appraisals, the state Land Board decided Tuesday, and if they object to the new values, they can appeal. The catch: Once the new values are set, the leases for the cabin sites again would be offered up for potential conflict bids from others. And for those cabin owners who are already part of pending land exchanges aimed at trading other ground to the state so they can gain ownership of the land under their cabins, new appraisals might not be ready in time.
“People are going to have to decide what’s in their best interest,” said Chuck Lempesis, attorney for the Priest Lake State Lessees Association. But he called the Land Board’s unanimous decision “a very positive step forward” that provides “options for our lessees who are in difficult positions.” You can read my full story here at spokesman.com.
Here’s some interesting historical perspective from Idaho Statesman reporter Dan Popkey: The last time Idaho held a conflict auction for state-owned cabin site leases was in 1987, when the state Land Board auctioned off 22 lots at Payette Lake in an effort to establish market values. It was a failure for the state; all but one of the 22 lots sold to existing leaseholders who paid the minimum bid, Popkey reports.
Plus, he reported, “The only bidders to contest an existing leaseholder were a Boise couple, Al and Sharon Hutchins, whose bids were booed by the crowd at a school gym in McCall. They got the lot, however, paying $46,000, $11,000 over the minimum.” You can read Popkey’s full report here.
Times have changed since then. In 1990, the state had scheduled a cottage-site conflict auction, but it was canceled, after then-Gov. Cecil Andrus signed into law new legislation protecting cabin-site lessees from conflict bids. In July of this year, the Idaho Supreme Court overturned that law as unconstitutional.
Back in 1990, then-Superintendent of Public Instruction Jerry Evans noted that the whole legality of the new law rested on charging market rents for the lots, an issue the state would struggle with over the following years, repeatedly backing off from proposed big rent increases after protests from longtime cabin owners, who own the cabins they’ve built on the state land. In fits and starts, though, rents rose substantially.
Popkey also notes that 85 percent of the state-owned cabin sites at Payette Lake are leased to Idaho residents, but the figure at Priest Lake is just 10 percent. Many of the Priest Lake lessees are from the Spokane area, which is the largest population center near the lake. For Payette Lake, that population center is Boise.
In 2007, Idaho tried to auction off two new lakefront cabin sites at Priest Lake with a lease rate double what others then were being charged, 5 percent of value vs. 2.5 percent. It was a flop; no one bid. About 50 existing lease holders attending the auction at the Coeur d’Alene Inn burst into cheers. Now, lease rates are set at 4 percent of value per year; the state is required by the Idaho Constitution to manage its endowment land – including the cabin sites – for the maximum long-term return to the endowment’s beneficiaries, the largest of which is the state’s public schools.