April 9, 2013 in Idaho

Idaho puts lakefront cabin lots up for auction

By The Spokesman-Review
 

For the first time, Idaho is opening up every state-owned cabin site on Priest Lake to bidding that could pit longtime leaseholders against new hopefuls willing to pay substantially more for the right to use the popular vacation lots.

At the same time, new state-commissioned appraisals that are used to calculate annual rents have come in at a whopping 84 percent higher for next year. Some Priest Lake cabin owners who were in the midst of negotiating for land exchanges to get ownership of the leased land under their cabins now are learning they can’t afford it.

“It will have an effect,” state Lands Director Tom Schultz said. He’s guessing that anywhere from 8 to 30 percent of the 354 Priest Lake cabin owners may default on their leases, walking away from cabins that in some cases have been in their families for generations.

“I’m not going to make false promises and say that it’s going to be OK, because for some of those folks, it may not be OK,” said Schultz, who will travel to Spokane Valley for a meeting with cabin owners Wednesday night. “What I’ve found is that people would rather hear the truth and be given options for dealing with the truth.”

Three factors are converging to leave those who built and own cabins on state-owned lots at Priest Lake – many from Spokane – at a crossroads, if they lack access to abundant sources of cash or credit.

First, the Idaho Supreme Court ruled last summer that a law protecting state-owned cabin sites from competing bids and lease auctions was unconstitutional. Second, the appraisal values ballooned. And third, Idaho has been moving toward getting out of the awkward business of renting land to people for private summer cabins, and toward a variety of methods aimed at bringing together the ownership of the land and the buildings on it – from land exchanges to auction sales to buying out cabin owners.

Bud Belles, whose family has enjoyed summer trips to the lake cabin since 1948, said, “My lease payment this year is $8,700. And it would go up to $19,000.”

“We can’t afford it,” he said. “I’m going to have to give up, but I’m afraid I won’t be able to sell it. Who would buy it, with these prices? Maybe there’s 300-and-some Californians down there that have been waiting for this to happen, but I doubt it.”

Schultz doesn’t expect many bids on the existing cabins; none has come in so far. Both current cabin owners and potential competitors have until April 30 to file applications. Competitors would have to pay one year’s rent in advance when they file; that’s an average of $16,000 to $18,000 now at Priest Lake. If they succeeded in outbidding the current cabin owner, they’d also have to pay the full appraised value of the building and improvements on the day of the auction, which likely would be in October, in addition to whatever amount they bid.

Belles, like Schultz, doesn’t anticipate many bids from nonowners. “I don’t think we’re going to get too many of those with the prices they’ve placed on the land,” he said. “It looked like the economy is a little better than the last two or three years, but I don’t think it’s 84 percent better.”

Denny Christenson, president of the Priest Lake State Lessees Association, said, “A lot of people are worried. Since the valuations have been announced, I’ve received probably 500 emails from our members. They’re very upset.”

The state is not allowing for appeals of the new appraisals because the bidding process should demonstrate whether the appraisals are too high, Schultz said. “If nobody bid, that would tell you you’re too high,” he said.

Christenson disagrees, and said a lawsuit could result. “We believe through the administrative code that there is a right to appeal through the courts,” he said.

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