Priest Lake cabin owners who lease their ground from the state of Idaho might see only half the rent increase that they’ve been promised.
The Idaho Land Board, composed of the state’s top elected officials, put its final decision off until next month. But faced with a room packed with close to 100 angry cabin owners, board members made it clear Tuesday that they’re willing to look for a compromise.
The board’s June decision to hike rents by 150 percent was “such a change that it probably leaned toward cruel and unusual treatment,” Secretary of State Pete Cenarrusa said, drawing the only applause of the five-hour meeting. “I think we should keep away from making a great shock on the lessees.”
Gov. Phil Batt said, “It’s not like we jumped up one day and decided we wanted to penalize these folks.”
The Land Board is required by law to manage state lands for maximum return for the school endowment fund, and that means charging fair-market rents, he said.
“What upset the applecart was the tremendous increase in assessed value.”
More than 200 Priest Lake cabin owners are contesting the values placed on their lots by the Bonner County assessor. For many, the values have doubled or tripled since 1992.
“The solution is fair, fair, fair market value,” George C. Manos of Priest Lake told the board. “You go around the same bay, the same lake, and it varies.”
Attorney Chuck Lempesis, speaking on behalf of Priest Lake cabin owners, said the owners have received no annual notice of their assessments, and been given no way to appeal them.
Lempesis proposed that the state go through a formal rule-making process to decide how to handle market value, assessments and appeals. “I think there’s a real opportunity to finally resolve this matter once and for all,” he said.
He also proposed exceptions for hardship cases.
In the meantime, Lempesis proposed that the board set 1998 rents based on 1992’s assessed values, because that’s the last year values were set that weren’t disputed. If the rents are set at 2.5 percent of 1992 values, most cabin owners will see roughly half the increase that’s been proposed for 1998.
The state determined that it’s getting only about 1 percent of market value, and to collect market rents, it upped that to 2.5 percent in a special meeting in June.
Attorney General Al Lance said, “I think 2.5 percent is defensible. The problem is, 2.5 percent of what?”
Disputes over the property values need to be ironed out before they’re used to set much higher rents, he said.
Many cabin owners were angry that the board isn’t sticking to a 10-year plan it outlined in 1992. At that point, the board agreed to raise rents by no more than 5 percent a year, with the goal of “phasing in” an increase to 2.5 percent of land value.
But it used 1992 values, so the plan effectively capped increases without ever reaching 2.5 percent of current value.
Walt Powers, speaking for cabin owners at Outlet Bay whose cabins are accessible only by boat and only part of the year, said, “We find ourselves in a very unstable situation and unable to plan for the future. We are all people of modest means.”
Some families have decided to sell their cabins because of the rent increases, he said, but can’t find buyers. Eighteen Priest Lake cabins with state leases are on the market.
Cabins on state-leased land are built and maintained by the lessees, who also pay property taxes on the structures.
Bob Williams of Hayden Lake, who built a 2,000-square-foot log home on his rented lot at Pinto Point, said he paid $120,000 for the place two years ago, $30,000 of it for an existing cabin that he then tore down.
“If I’d a known that this lease was going to go up this much, I’d a never paid that much for the leasehold, and I’d sure as heck never would’ve put up a 2,000-square-foot log home,” he said.
His $2,600 annual rent is scheduled to jump to $6,900 on Jan. 1.
Ron Dube of Spokane, who’s had his Priest Lake cabin for 51 years, said he considered leaving it to his five children when he dies, but now he’s not sure they’ll be able to afford to take it.
“If we willed it to them, we were willing them a problem.”
Land Board members told the cabin owners they are willing to consider phase-ins, a new appeal process, possible new rules and more at their next meeting.
Lempesis said afterward, “I thought they treated people fairly. I think we made progress.”
Doug Cresswell, president of the Priest Lake State Lessees Association, said, “I’m encouraged by the way the Land Board is looking for a compromise solution.”
Several Land Board members said they favored Lempesis’ proposal to use 2.5 percent of 1992 values to set next year’s rents.
That’s the “target rent” that the 1992 agreement would have moved most cabin owners to within the next five years.