May 1, 2013 in Idaho

Five cabins face ‘conflict bids’

Owners to be compensated if they lose lease
By The Spokesman-Review
 

BOISE – Four cabin owners on state-owned, leased land at Priest Lake, and one at Payette Lake, could lose their lake homes this fall after drawing competitive bids for their leases.

Five so-called “conflict bids” were filed by deadline Tuesday. If the current owners lose in the bidding process, the high bidders would have to immediately pay them for the appraised value of their homes.

It’s the first time in decades Idaho has faced that situation on its state-owned cabin sites on scenic Priest and Payette lakes. For years, state law protected the lessees from such bids at lease renewal time, but the Idaho Supreme Court overturned that law in July as unconstitutional.

For the Priest Lake cabin owners, many of whom live in the Spokane area and some who have had the cabins in their families for generations, it’s been a stressful process. But Denny Christenson, president of the Priest Lake State Lessees Association, said a conflict auction could have a silver lining for lower-income leaseholders who are struggling with increasing land rents: If they lose out in the bidding, they’ll be paid for their cabins.

Bids will start at $1,000 for the right to take over the lease at the existing lease rate; the high bidder wins. Each conflict bidder had to deposit a full year’s rent, which averages $20,000, by Tuesday’s deadline. If the competitor wins, he or she would have to pay the appraised value of the home into escrow before leaving the auction. The auction will be open only to the current lessee and the competing bidder.

Priest Lake lessees have sharply objected to new state appraisals for the lots for next year that shot up 84 percent over this year’s values. “Our lessees are pretty upset,” Christenson said. Three lawsuits are pending in 1st District Court in Bonner County over the appraisals.

After years of struggle over whether the rents charged for the lake cabin sites met the state’s constitutional requirement to manage its land for the maximum long-term return to the endowment’s beneficiaries – the largest of which is Idaho’s public schools – the state is moving toward getting out of the cabin-site business. But it still has 354 sites at Priest Lake and at least 150 at Payette Lake, and every one of those leases is expiring Dec. 31.

As of Tuesday’s deadline, 343 of the 354 lessees at Priest Lake had applied to renew their leases. At Payette Lake, 134 of the 150 lessees had done the same. The fate of the 11 other lots at Priest Lake and the 16 at Payette Lake is uncertain, but Tom Schultz, director of the Idaho Department of Lands, said some involve lessees who already were behind on their rent or otherwise in default on their leases.

Around 200 of the renewal applications from Priest Lake lessees included letters stating that they don’t waive any of their legal rights in their challenge to the appraisals.

Over the coming years – even as soon as this summer – the state will look at land exchanges, auctions and other moves to get out of the business of being a landlord for lake houses. That could allow some of the existing lessees to buy the land under their cabins. But for now, a small number of them could face competitors to keep the plots.

“If you’re a lessee, you probably don’t look at it as a good thing,” Schultz said. “If you’re the state, it says at least on those sites, at that value, someone is willing to want to acquire that for that value. To me that’s a positive.”

The five cabin owners who are the targets of the conflict bids haven’t yet been identified; the state will begin notifying them today.


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