Some Priest Lake cabin owners who lease land from the state can expect their rent to more than double next year.
The state Land Board voted Wednesday to increase annual rents there and at Payette Lake to 2.5 percent of current market value, beginning Jan. 1.
Currently, cabin owners pay about 1 percent of value - an average of $3,915.
“It’s very unfair,” cabin owner Chris Hugo, of Spokane, said of the change. “As it is, my wife and I talk a half-dozen times a year about whether we should sell.”
A disappointed Doug Cresswell, president of the Priest Lake owners association, chastised the board for the decision, which will boost school endowment funds by $1.9 million.
“There will be sticker shock for some of our lessees,” said Cresswell, who recently retired as Coeur d’Alene School District superintendent. “The appropriate thing to do would have been to delay and throw a proposal out there and let people comment on it.”
State Schools Superintendent Anne Fox also urged board members Wednesday not to make a decision, agreeing with leaseholders’ representatives that more study is needed.
Land Board members met her halfway, making the change but promising to revisit the issue if even one board member requests it.
The increase has been a long time in coming, with Land Board members saying rental rates haven’t been keeping up with skyrocketing land values.
That, they contend, violates the law and cheats Idaho schoolchildren, who benefit from endowment funds.
Cabin owners charged that any change will turn Priest and Payette into Lake Tahoe-type sites, only affordable to millionaires.
“If that’s not considered when you’re talking about lease rates, that’s a tragedy,” said Hugo, whose family has owned his cabin for 100 years.
The Legislature passed a law in 1990 freeing cabin owners from facing competitive bidders when their leases came up for renewal. In exchange, lawmakers required the state charge market rents.
That never happened.
In 1992, the board agreed to boost rents to 2.5 percent of value over 10 years, with increases limited to 5.3 percent per year.
Lakefront property at Payette which once was worth $1,000 per front foot now brings $5,000 per foot and up.
That means a lot with 100 feet on Payette Lake would be worth $500,000. At 2.5 percent, the rent would be $12,500 per year compared with a maximum of about $4,000 now.
Because of the rapid increase in land value, however, the 1992 rate now is producing only 1 percent of value.
Controller J.D. Williams, who voted for the 1992 plan, admitted Wednesday it was a mistake because it didn’t take into account the rapid increase in values.
“We missed it by a mile, a long way. We’re way below it,” he said.
Sally Trott of Boise estimated that if the board had been collecting the proper amount since 1992, state endowment funds would have received another $5.3 million.
New rates would be based on 1996 valuations, the latest available.
But critics contend the valuations themselves are unfair.
Coeur d’Alene appraiser Ed Morris questioned the methods used and suggested doing the work over again.
Orofino mechanic Keith Hansen’s cabin site was recently appraised at more than $215,000, which will cause his annual lease rate to jump from $2,700 to about $5,200.
“I think the appraisal itself is unrealistic,” Hansen said of his 80-year-old cottage. “I don’t think if it was sold it would actually bring that rate.”
Hansen, a good friend of Hugo’s, also said the Land Board never took into account all the cleaning and upkeep work cabin owners do to the sites.
“If they would have taken a look at the whole picture, they would have seen they weren’t getting that bad a return on their investment,” he said.
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