Idaho’s top state elected officials Tuesday quietly heard a presentation on what happens if longtime renters of state-owned lake cabin sites just walk away from their leases, faced with big rent increases next year or costly land-acquisition processes.
A court decision last summer removed protections the state had granted lake cabin-site renters, including those at Priest Lake, from competitive auctions when their leases come up. At the same time, the state is in the process of moving to get out of the cabin-site rental business, either through land exchanges, auctions or other moves that will keep income flowing to the state’s endowment. In the midst of all that, new state appraisals on the 354 Priest Lake cabin sites came in an average of 84 percent higher for next year, with some more than doubling.
If lease-holders walk away, the state would demand payment, and would charge interest and late fees. It could demand that the renters remove their cabins; if not, and if the cabin sites are transferred to new renters or owners, the previous cabin owners could get reimbursed for their improvements, with late payments, interest and fees deducted.
“We’ve got a Supreme Court decision that we have to go with,” said Gov. Butch Otter. “That’s where we are.”
Cabin owners have until April 30 to apply to renew their leases for 2014; the current leases expire Dec. 31.
Denny Christenson, president of the Priest Lake State Lessees Association, said when state Lands Director Tom Schultz asked lessees at a well-attended Spokane Valley meeting last week how many “were really thinking about not renewing, or not signing the 2014 lease … I would guess easily 90 percent stood up.”
Said Christenson, “There are several lessees that have no option. With an average of 84 percent increase in values, some as high as 168 percent, they can’t afford to remain as lessees, they can’t afford to buy their lot either through an exchange or a voluntary auction, and there’s no market to sell ‘em. They’re in a no-win situation.”
The Idaho State Land Board is required by the state 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. Much of the state’s endowment is timber land on which logging brings in annual income; the cabin sites bring in far less.
“Obviously these people have enjoyed these cottage sites for generations, in some cases, and I certainly can see that,” Otter said. “I understand the anxiety that it’s caused, but it doesn’t lessen our obligation.”
April 30 also is the deadline for people to step forward who might want to bid against the current lessees; so far, none have. Fewer than a third of Priest Lake cabin owners have filed their renewal applications so far, though the applications don’t obligate them.
Land Board members also heard a briefing Tuesday from staffers on a new process for lessees to point out factual errors in their new appraisals. If those are reported to the state Lands Department by April 30, the department will review them, and if warranted, ask the appraisers to consider them and make revisions.
Christenson said, “There’s four I know of that when they opened up their appraisals, there was a picture of a different cottage site. … Others were based upon wrong (lake) front footages. Others assume that there were certain amenities available when they’re not available. So the appraisals speak of being hastily done and sloppily done.”
The department had previously said it wouldn’t allow for any appeals process on the appraisals. It still won’t consider the lessees’ main beef – that they believe the values are too high.
“We are asking the lessees who obviously know the ground, have been on the ground for some time, to come forward with factual errors that we can correct in the appraisals,” Deputy Lands Director Kathy Opp told the Land Board. “What would not be a fact error would be, like, ‘I don’t like my value, it’s too high,’ or “The appraiser didn’t use enough comps.’ … We are deferring to their professional judgment.”
In a memo to the board, Opp wrote, “All factual errors will be corrected with an addendum to the appraisal, or a new appraisal, as needed on a case by case basis.”
Schultz said when he traveled north from Boise last week to meet with Priest Lake lessees, “It was a difficult meeting. People were very passionate, very upset.”
He met with the lessees for more than an hour and a half; then he left and they met with their attorneys. On Tuesday, the Land Board held a closed-door executive session to consult with its attorneys as well.
Afterward, Secretary of State Ben Ysursa said, “We hope it doesn’t get into litigation, but it probably will.”
Christenson said, “Our main concern is that our members get compensated for their improvements. And if the state refuses to do that, however they decide to do it, I think there’s a very good chance that there could be legal action on behalf of our members, if they’re placed in that position.”