December 17, 2008 in Idaho

Idaho freezes rent for cabins on state land

Decision brings relief in uncertain market
Betsy Z. Russell Staff writer
 

BOISE – Idaho’s top elected officials have agreed to freeze the rents they charge cabin owners on state lands for the next year.

The 3-2 vote brought sighs of relief from cabin owners – some of whom had traveled from Spokane – who crowded into the old courtroom where the state Land Board meets. The vote averts a 15 percent rent increase that the board had tentatively approved in June for 2009.

The Land Board also voted to set a June 15 deadline to come up with a new system for setting rents for state-owned cottage sites at Priest Lake and Payette Lake, with board members agreeing with leaseholders that the current system isn’t working.

“It is a disaster in North Idaho – the real estate market has crumbled,” said Chuck Lempesis, attorney for the Priest Lake State Lessee Association. Raising rents now, he said, would be “like pouring gasoline on a forest fire. … It scuttles the market; it will only deter future sales.”

Bud Belles, of Nine Mile Falls, the association president, told the board, “The economy has changed drastically.”

Idaho uses a formula setting rents at 2.5 percent of the market value of the bare land on which lessees build and maintain their cabins. But those values, which have shot up in recent years, have been hotly disputed.

“The point is that all the indexes that we’re looking at are negative, and not a positive increase of 15 percent,” Belles told the Land Board.

Idaho Secretary of State Ben Ysursa proposed raising rents for 2009 by just 5 percent, and state Controller Donna Jones suggested 2.5 percent, but at that point, her proposal brought groans from the audience. Jones said, “We’re not always going to have a stable, consistent market in a resort area.”

Idaho Gov. Butch Otter spoke out against increasing the rents now by any amount. Though state Land Department officials said values typically lag a year in the state’s formula, and a declining real estate market now could mean rent decreases next year, Otter said the state must be a “reasonable” landlord. Raising rents now without evidence that values are going up would be as bad as eroding away the beaches that many of the state cabin sites overlook, he said.

State Superintendent of Schools Tom Luna proposed the freeze. “Even if we freeze it, we still have a positive return,” he said. Proceeds from the leases go to public schools, universities and other state institutions.

Luna noted that the state’s permanent endowment fund, which also provides funding for those institutions, is actually losing money now due to the economic turmoil. The endowment lost 4 percent on investments in November, and is now down more than 25 percent for the fiscal year.

Otter, Luna and Ysursa voted in favor of the freeze in rents for 2009, with Jones and Attorney General Lawrence Wasden voting no. The motion passed, 3-2.

Bill Gabrio, of Spokane, whose family has had its Priest Lake cabin for more than 50 years, said afterward, “I was really encouraged … particularly by the governor’s comments on fairness and how that will ultimately impact relations between the lessees and the state.” With a grin, he said, “I’m pleased.”

The average lease payment at Priest Lake is now more than $7,000 a year.

Jim Young, president of the Payette Lake Cabin Owners Association, said, “It’s a really emotional issue for the lessees – it’s been a long struggle. We feel market rents are substantially below what we are currently paying, so any increase is going in the wrong direction.”

With the one-year freeze, he said, “At least it gives us some breathing room to get to resolution on this issue.”

Belles said he was particularly glad to get a firm deadline to develop a new method of calculating rents, “so we can avoid this year after year – it’s getting tiresome. I’m getting tired.”

Belles, 68, and his family have had their Priest Lake cabin since he was 8 years old.

Betsy Z. Russell can be reached toll-free at (866) 336-2854 or bzrussell@gmail.com.


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