June 20, 2014 in Idaho

Lawsuit challenges Priest Lake cabin-site values

By The Spokesman-Review
 
FILE photo

Priest Lake as seen from a cabin in July 2012.
(Full-size photo)

Seventy-six cabin owners on Priest Lake who rent the land under their cabins from the state of Idaho have filed a lawsuit, charging that the state is claiming ownership of improvements including access roads, utility lines and more that the renters actually installed with their own money.

As a result, the latest appraisals for the state-owned cabin sites – which will be used both as minimum bids for possible public auctions and as the basis for future rents for continuing leases – have ballooned by up to 80 percent, they charge, pushing them out of many lessees’ price range.

“The appraisals are objectively wrong,” the cabin owners argue in court documents; they’re seeking an injunction to stop the state from using the new appraised values, and return to last year’s values plus a 1.6 percent inflationary increase.

But the state says that would mean a loss to the state’s endowment, which benefits public schools, of nearly $2 million next year. Idaho has an auction scheduled for Aug. 28 for 62 of the 354 state-owned cabin sites at Priest Lake. That’s just for lessees who voluntarily signed up for auctions, willing to take a chance at getting outbid to get ownership of the ground under their cabins. The group suing includes a half-dozen who are signed up for the auction.

If cabin owners are outbid at auction, the successful bidder would have to pay the current renter appraised value for their cabin and other improvements.

“The valuations are really indefensible,” said Kaari Burrows Davies, a Kellogg native and Spokane resident whose father, with his father, first built a cabin on a Priest Lake state lot in 1959.

When Idaho first started leasing out the lots a century ago, the land was entirely undeveloped, with forest stretching all the way down to the water. Cabin-site renters brought in their building materials by boat, and arranged on their own to bring in roads and utilities.

The cabin owners, whose attorneys include former Idaho state redistricting commissioner Ray Givens and former Idaho Lt. Gov. David Leroy, say the state is violating their constitutional rights, illegally taking their property - the value of the roads, utilities and so forth – without compensation. They’ve also listed several other concerns about how the appraisals were set.

In response to protests from lessees over the soaring values, the state set up an appeal process for the appraisals. But all phases of that include the same instruction to appraisers: To value the lots as if they have roads and utilities leading to them.

Givens, in a brief filed with the court arguing for an injunction, said the average rent at Priest Lake in 2015 would rise from the current $9,915 a year to $17,850, “an 80 percent increase in one year,” under the new appraisals.

Idaho Secretary of State Ben Ysursa, who’s worked on the cabin site issue for years as a member of the state Land Board, said, “It’s been a struggle.” He noted that the board has been trying to move toward “unifying” title for the cabin lots, rather than the current situation, which splits ownership between the state – owning the land – and the renter, owning the buildings and other improvements.

That’s why it has the auction scheduled; an earlier auction for cabin sites at Payette Lake in southern Idaho was successful, and most renters bought the lots under their cabins at the appraised price.

“It’s always been the big question – just what is the value of these things?” Ysursa said. “We’ve always fought about it.”

The state backed out of a series of proposed land exchanges in the past year designed to get the state endowment higher-earning property in exchange for the cabin sites. Many lessees had spent big sums to prepare to join the exchanges. “My analogy was we left the brides at the altar,” Ysursa said.

He doesn’t dispute that in many cases, it was the renters over the years who developed the land where the cabins sit.

But the state argued in court documents this week that that doesn’t matter – because the renters have no right to continue their leases or get a certain minimum price at auction, regardless of the value of the lots. That’s why the Idaho Supreme Court overturned a 1990 law exempting cabin site renters from having to bid in open auctions for the right to continue their leases each time they came up for renewal. “When a lease expires, the Land Board is under no obligation to re-lease it to the existing lessee,” the state’s attorneys wrote. “The Land Board may withdraw the property from leasing, make it available for sale, or decide to keep leasing it.”

The existing renter would be “on an even playing field” with competitors at any auction, either to buy or lease the land in the future. And the Land Board could set the prices and rents at its discretion, to earn money for schools.

The state lawyers also quoted a 1911 Idaho Supreme Court decision that said decisions about leasing or selling state endowment land are “purely a matter of policy to be determined by the State Board of Land Commissioners, and if they act unwisely they must account to the electors of the state, but their judgment and discretion in such matters cannot be controlled by the courts.”

The Land Board, chaired by the governor, consists of the state’s five top elected officials.

Ysursa said, “We don’t take the lawsuit lightly.” He noted that Givens is the one who engineereda landmark 1980 state redistricting plan; he also won the U.S. Supreme Court case granting title to the lower third of Lake Coeur d’Alene to the Coeur d’Alene Tribe.

“Mr. Givens is a very competent attorney,” Ysursa said.

1st District Judge Barbara Buchanan in Bonner County has scheduled a hearing on the request for an injunction for next week.


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