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Idaho may change Priest Lake leases

Wed., July 11, 2007

BOISE – People with cabins on state-owned lots at Idaho’s Priest Lake could get 30-year leases, up from the current 10 years – but they may pay more each year for the privilege.

Idaho’s Land Board voted unanimously Tuesday to ask the Legislature to change the state law that now limits cottage site leases to just 10 years. “Ten years may make sense in terms of other kinds of lease arrangements that we may have, but it does not make sense here,” Attorney General Lawrence Wasden said.

The board also voted unanimously to auction off two new prime lakefront leaseholds on Priest Lake – the first such new lots in decades – but to charge twice as much in annual rent as for existing cottage sites. Those new lots would rent for 5 percent of appraised value per year, instead of the current 2.5 percent.

State officials said the auction, in October, will show “what the market will bear.”

“It doesn’t mean this is going to absolutely set the template for all the leases in the future – but it could,” Gov. Butch Otter said.

That move came over strenuous protests from existing Priest Lake cabin owners, who wrote letters to the Land Board and protested at a recent cabin owners association meeting that such increases could drive them out of cabins their families have owned for generations. Many noted that their Priest Lake cabins are accessible only in the summer – about five months a year.

“Don’t sell Priest Lake to the highest bidder!!” wrote Robert and Vel Babbitt.

Secretary of State Ben Ysursa is chairing a Land Board subcommittee that will examine how rents should change before all other Priest Lake cabin sites come up for new leases at the end of 2010. “It merits looking at a phase-in, as far as I’m concerned, to jump it 100 percent,” he said. “But that’s for the whole board to decide.”

A Land Board study determined that U.S. Forest Service lots at Priest Lake are renting for 5 percent of value, as are state-owned cottage sites in Montana and Wyoming. But Ysursa said the Forest Service apparently determines value differently than the state, and that’s something the state should review.

It’s a difficult question, because the cabin owners build and own all buildings and improvements on the lots. The state determines the appraised value of the lots as if they were bare land.

Cottage sites at Priest Lake rented for $10 a year in 1945. Last year, they averaged $5,600.

The issue’s been even more contentious at Payette Lake near McCall, where the state uses assessed values set by the county assessor to determine its rents. Those values have skyrocketed, with some rising as much as 250 percent in the past year.

The Admissions Act that created the state of Idaho limited cottage site leases to 10 years, but that act was amended by Congress as part of Idaho’s endowment reform in 1998. Now, the federal legislation simply says cottage site lease terms shall be determined by state law.

Land Board members noted that many cottage site owners protested that they shouldn’t pay higher rents when they get only 10-year leases, and that 10-year leases are inappropriate for real estate. The longer lease period “should give some comfort to the lessees,” Ysursa said.

Otter noted that the Idaho Constitution requires the Land Board to manage state endowment lands for the maximum long-term return to the endowment fund, which benefits public schools.

The two new leases would include a clause that their terms would change in 2011 to match whatever the state decides for other state lots at Priest Lake. Idaho could auction off 100 or more additional Priest Lake lots in the future, including non-lakefront lots.

State law requires the state to either charge market rents for the lots, or open up the leases for bids by competing parties every 10 years. Ysursa said the state’s research shows pretty clearly that 2.5 percent of value is less than market rent.

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