Selling land could soothe Idaho’s lease headaches

Tenants who lease state-owned lots on North Idaho’s Priest Lake will have to wait another month to learn how much the Idaho Land Board plans on charging them beginning next year. By March 16, when the board now plans to address the issue, the tenants will have only a month and a half to decide if they want, or can afford, to reapply.

Such a decision would have been easy in 1945 when leases cost $10 a year. Now that they cost about $7,000 and might go up as much as 60 percent, it’s not so easy.

Still, this dilemma didn’t sneak up on anyone. It’s been building for about 15 years as property values in Idaho mushroomed. By law, the Land Board is duty bound to get the best return it can for the state school endowment fund, although focusing on market rates for rental property may push the cost of leases out of reach for existing tenants, some of whose families have held them for decades.

However, while the land is the state’s, the cabins, vacation homes and other improvements that have been made over the years belong to the tenants, making it complicated to walk away from a lease that’s become unaffordable.

At least the Land Board appears to be taking seriously the advice then-Gov. Phil Batt uttered in 1995: “I think any responsible way to get out of that business would make sense.”

On Tuesday, at the same meeting where it deferred its decision on lease structures, the board ordered a report, due next January, on how it could consolidate the ownership of the state’s land and the tenants’ cabins. That would at least simplify matters, although it wouldn’t necessarily take the state out of its vacation-getaway landlord role.

In the late 1990s, the state wisely swapped some parcels on Payette Lake, which has the same situation, for commercial urban properties the Land Board now manages in Boise. The land-trade approach is one way the state might divest itself of the 354 leased parcels at Priest Lake and 168 at Payette Lake. The goal should be to end the headache that the lease arrangement has become while preserving the revenue stream – now about $4 million annually – that flows to the state school endowment fund.

When the rising real estate market began driving property values up, and lease rates along with them, leaseholders who could no longer afford the rent deserved a reasonable amount of time to find buyers for their improvements.

But the trend has been clear for long enough to satisfy the tenants’ transitional needs. And the Land Board can’t ignore its fiduciary obligations to the state, and especially its schoolchildren, to manage the endowment lands as profitably as it can.

If it does that, the lease rates will rise. But to ease the recurrent agony, the state should find a responsible way to sell off these properties.