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Spokane, Washington  Est. May 19, 1883

Land Board Puts Brakes On Disputed Swap State Panel Also To Look At Raising Rents For Hundreds Of Cottage Sites At Priest, Payette Lakes

Idaho Land Board members, not convinced Monday that a controversial land swap is a good deal for the state, instead ordered extensive studies of how much the state stands to make by selling, trading or keeping the land.

Board members also hinted that the state should sharply increase its rents for cottage sites at both Payette and Priest lakes.

“We need to look at these lease rates again,” said state Controller J.D. Williams.

The state had proposed trading six cottage sites on Payette Lake, near McCall, plus 2,920 acres of range land, for 459 acres of timberland. The idea was to get rid of land that earns little in exchange for long-term income.

But opponents said the cottage sites could be just as profitable as the timberland if the state would charge fair-market rents - as it is required to do by a 1990 law.

Gov. Phil Batt questioned figures comparing current cottage-site rents with anticipated timber proceeds.

“It doesn’t seem to me like we can work an exchange based on the artificially low rate of return that we’re getting now,” he said.

In 1992, the board limited rents to 2.5 percent of that year’s assessed value for 10 years. But the six lots have increased in value by more than 2-1/2 times since then. That means the state is earning less than a 1 percent return on its investment each year.

State studies have shown that the school endowment fund makes more money over time from land than it does from cash investments. Batt said, “Nevertheless, if we’re going to rent for 1 percent, we ought to consider going to cash.”

If the cottage sites were sold and the proceeds invested, the state could earn 4 percent a year or more.

Idaho has 355 cottage sites at Priest Lake leased by individual cabin owners. It has 241 at Payette Lake. Most of the discussion about trading or selling the sites has centered around Payette Lake cabins, but all cabin sites would be affected by changes in lease rates.

Williams said he thinks cottage site rents eventually could hit 4 percent or 5 percent a year and give the state a good return.

But, he warned, “We’d better consider phasing it in because that would be a huge increase.”

Land Board members noted other problems with the exchange, including:

State Attorney General Al Lance said a Utah Supreme Court decision overturned a similar exchange because the people getting the land paid for the appraisals. That happened in this case, too. The board voted unanimously to refund the appraisal fees to the potential purchasers.

Hunters are concerned they’ll lose access to the large tracts of range land to be traded away. Williams said he’d favor amending the swap plan to remove at least one of the pieces of range land - and possibly all of it - in favor of possibly trading more cabin sites.

State Superintendent of Schools Anne Fox said not only land values but also potential appreciation should be taken into account in the exchange. “I’m not sure it’s comparable.”

Fox, along with other members, questioned whether the state could get a better return from selling the land and investing the money.

The board voted unanimously to direct the state Lands Department to hire a financial consultant to look into all the options.

Opponents of the exchange praised the board’s decision.

“This deal didn’t pencil out,” said Sally Trott of the Stop the Swap Coalition.

Diane Graves, one of the cabin owners, warned that steep rent increases will simply force turnover among cabin-site renters, many of whom are retired.

“One of the greatest tools you have for long-term maximum financial return is stability,” she said.

The Land Board is charged with managing state lands solely for the maximum long-term gain to the school endowment fund.

Batt blasted critics who wrote to him charging that “we don’t have the best interest of the state at heart, that we’ve sold out to big business.”

“That’s unfortunate, because this board’s extremely conscientious in trying to get the best return for the endowment fund. Any indication to the contrary is wrong.”

, DataTimes