July 16, 2013 in Idaho

Idaho cancels 3-lot auction planned for Priest Lake

By The Spokesman-Review
 

BOISE – Idaho has dropped plans to auction off three undeveloped lakefront cabin sites on Priest Lake this summer, and instead will look at possibly auctioning up to three other lots on the lake next year.

“Those three were not the ideal locations, after on-site review,” Thomas Felter, the state Lands Department’s manager of commercial and residential real estate, told the state Land Board this morning. Plus, he said, the department’s appraiser said it would take six to 12 months to properly market lakefront lots for auction.

The auction, initially planned for August or September, was designed to give the state a better sense of the true market value of bare lots on the lake, as it moves toward trading away or auctioning off existing cabin sites on the lake.

Appraiser Steven Hall, in a letter to department Director Tom Schultz, wrote, “I am sure you can fully appreciate the impossible task of exposing these lots for sufficient time to allow potential buyers the chance to personally inspect the lots, get financial arrangements made if they have interest and then to attend the auction. These types of decisions are not made in a 30-day window unless the buyer can expect a liquidation price.”

Idaho has long rented out lakefront lots at Priest and Payette lakes to people who built summer cabins on them; many of the Priest Lake cabin owners are from the Spokane area, and some families have had their cabins for generations.

But the land is part of the state’s endowment, which the state Constitution requires to be managed for maximum long-term returns to the endowment’s beneficiaries, the largest of which is the state’s public schools. In recent decades, the state has struggled to hike rents for longtime cabin owners to keep up with market values for lakefront land, amid protests, lawsuits and dissension.

Now Idaho is moving toward getting out of the cabin-site rental business, in which the state owns the ground but its renters own the buildings on it. A push came from an Idaho Supreme Court decision last summer that invalidated a law protecting the renters from competitive bids at auctions each time their leases expire.

Felter told the Land Board, which consists of the state’s top five elected officials, that the department now wants to withdraw the three lots previously identified for auction, and instead get approval to auction off up to three other Priest Lake lots in a “market-savvy manner” over the next year.

Idaho Attorney General Lawrence Wasden told Felter, “I want to make certain that we’re going out on-site, getting that site view of those lots, as opposed to where we had been in the last 30 days.”

“There will be an on-site review of each of those lots to make sure that they fit within the market type of entire portfolio,” Felter responded, “so they are actual comparables.” The board then unanimously approved the department’s request. Felter said none of the auctions would be scheduled before next spring.

Schultz told the board members he’d be glad to take them out to the chosen cabin sites to see them in person; Gov. Butch Otter and state Controller Brandon Woolf recently toured state-owned cabin sites on Payette Lake, including some on which the lessees have defaulted and the state has foreclosed.

Otter said, “I noticed the fuel load around those cabins was very heavy. … It hadn’t been addressed in quite some time – the needles are about that deep.” If a fire came through, he said, “It would’ve taken not only our cabins … but it would’ve taken a lot of our neighbors as well.” During the tour, the governor asked Lands Department officials, “Why aren’t we doing something to reduce this threat of fuel loading?”

In response, the department has a contractor scheduled to clear dry debris from the property over the next two weeks.


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