Priest Lake lot fees in limbo

BOISE – When owners of hundreds of cabins on Idaho state land at Priest Lake submit their applications to renew their leases next year, each will have to pay a $250 fee – up from $10.

But that doesn’t have the owners upset, because it’s small potatoes compared with the bigger issue: How much Idaho will charge for rent on the land under their cabins.

For the past two years, cabin owners have warned that the state’s recent push to sharply increase rents would turn Priest Lake into a much different place – a haven for the ultra-rich – and families who have had lake cabins there for 50 and 60 years would have to give them up.

In June, the state Land Board voted unanimously to freeze the rents for one more year, after making the same move a year earlier. Meanwhile, a Land Board subcommittee has missed a June 15 deadline to come up with a new methodology for setting rents.

“It’s a work in progress,” said Secretary of State Ben Ysursa, who heads the subcommittee. “I’ve been around the issue for 35 years, and it’s not any easier. … We have to, No. 1, meet our fiduciary duty as trustees of endowment property, and two, be fair in the process. And getting those things worked out is what’s taking the time.”

In the meantime, Land Board members have unanimously endorsed a staff proposal to raise all lease application fees for state endowment lands, including those for cabin sites, grazing leases, communications sites and more, from $10 to $250. State Lands Director George Bacon said a study showed the state wasn’t covering its costs to process the applications.

“We don’t think the new fees are going to totally meet all of our costs, but it’s a lot fairer from the agency’s point of view than the $10 fee,” he said.

Bud Belles, of Nine Mile Falls, president of the Priest Lake State Lessees Association, said, “That is such a minor part of what we’re dealing with, I’m OK with it. I understand that they have to cover their costs.”

He’s more concerned that a new deal hasn’t been reached on how to structure rents in the new cabin-site leases. Until now, leases were limited to 10 years; under a new Idaho law, they’ll be able to stretch for as long as 35 years. There are 354 lakefront cabins on state-owned lots at Priest Lake; all are up for lease renewals at the end of 2010.

Belles said the average land rent for a Priest Lake cabin is about $7,000 a year. Cabin owners also build and own improvements such as power, sewer and water lines, and pay county property taxes on all buildings and improvements.

Currently, the state sets rents at 2.5 percent of current market value for the land under the cabins, but those values have been hotly disputed.

“I think we’re getting closer to where they should be, because they’ve been frozen and time has marched on,” Belles said. “I just hope that we can come up with something that’s workable and not force people to sell their cabins. I’ve had a few people say if it goes up another thousand dollars, that’s just too much. A thousand dollars is not that much, but when you’re on fixed income, as many of these places are, that does make a difference.”

The cabin-site rents from Priest Lake and from Payette Lake at McCall bring in $4 million a year for Idaho’s endowment, which benefits public schools and universities.

In October 2007, Idaho tried to auction off two new cabin sites on Priest Lake at twice the rent – 5 percent of value. No one bid.

Soaring values for lakefront land at Payette Lake have pushed some cabin-site rents there up from $5,000 a year in 2001 to close to $30,000 a year in 2007.

“We’ve seen the volatility of recreational property,” Ysursa said. In the past two years, he said, values seem to be dropping, rather than increasing. “Raising rents dramatically when values are dropping doesn’t seem to be something the board is anxious to do, and that’s why we haven’t done it.”