March 17, 2010 in Idaho

Priest Lake cabin lots will see rent increase

Lessees worry values will drop
By The Spokesman-Review
 
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BOISE – Rents for state-owned cabin sites at Priest Lake will go up an average of 9 percent each year for five years starting in 2011, a 54 percent increase overall for the popular vacation lots, Idaho’s state Land Board decided Tuesday.

The board also imposed new surcharges when the cabin leases change hands – a move that a lawyer for the Priest Lake State Lessees Association warned will “destroy the marketplace” for the private cabins on state-owned land.

“You are driving down the values that you as an endowment fund will own – you don’t want to do that,” attorney Chuck Lempesis, of Post Falls, told the Land Board, which consists of Idaho’s top state elected officials.

But the Land Board voted 3-2 in favor of the plan, which will take effect when all 354 Priest Lake leases come up for renewal on Dec. 31. It will set cabin site rents at 4 percent of the average land value over the past 10 years, with a five-year phase-in; current state policy sets rent at 2.5 percent of value.

Secretary of State Ben Ysursa, who proposed the plan, said it still wouldn’t bring the state up to full fair-market rents because the Land Board has frozen rents for both Priest Lake and Payette Lake cabin sites for the past two years amid protests over fast-rising valuations.

Currently, because of the freezes, he said, the state’s not even at 2.5 percent of current value in its rents – and it still wouldn’t be with the proposed increases.

The Land Board is required by the Idaho Constitution to manage state endowment lands for the maximum long-term return to the endowment’s beneficiaries – the largest of which is the state’s public schools.

“We have to be fair to the beneficiaries – that’s our mandate,” Ysursa said. “We also have to be fair to the folks that we’ve done business with over the last 40 or 50 years.”

Ysursa said his phased-in approach would avoid a sudden, sharp uptick in lease rates.

State Controller Donna Jones spoke out against the plan. “I don’t think it’ll bring us to a true market rent,” she said. Attorney General Lawrence Wasden joined her in opposing it.

But Gov. Butch Otter and state Schools Superintendent Tom Luna joined Ysursa in backing the plan, and it passed.

“I believe there’s a great value in stability,” Otter said. Most importantly, he said, he wants the state to “get on a program” to “in some way trade ourselves out of, auction ourselves out of, sell ourselves out of these lots. And I think I’ve made myself clear on that.”

Luna said, “We’re never going to maximize earnings for these properties until we sell them … or trade them for other assets.”

Bud Belles, of Nine Mile Falls, president of the Priest Lake State Lessees Association, said with the looming rent increases, “We have a lot of lessees that just cannot afford it anymore.”

Belles, 69, whose family has owned his cabin since he was 8 years old, said he’d much rather own the ground under his cabin than lease it. “We wouldn’t have to go through this every five years, 10 years or whatever,” he said. “It’s never going to stop.”


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