Boat moorage sale a ‘scam’

BOISE – Anyone who’d try to sell permanent boat moorage rights on state-owned lakes would be perpetrating a “scam,” acting Gov. Jim Risch declared Tuesday.

Idaho’s top state elected officials, meeting as the state Land Board, were incensed at news that a North Idaho marina owner wants to sell boat moorage rights on Lake Pend Oreille for $100,000 or more, when marina owners operate on just 10-year leases from the state.

“I thought that was kind of strange since we own it – we, the state of Idaho, own it,” Risch said. “They certainly can’t convey the rights that we have.”

Steve Wetzel, attorney for Bayview marina owner Bob Holland, said legal details of Holland’s plans have been misunderstood.

“He can’t sell a boat slip,” Wetzel said. “You can sell the personal property which is floating, but you can’t sell a slip, because the slip is over the state’s property.”

Anyone buying into a pricey co-op or “dock-o-minium” would be taking the risk that the 10-year state lease on the lake wouldn’t be renewed, Wetzel acknowledged, but he said states rarely cancel such leases. “I don’t think I would characterize it so much as a gamble, as an investment risk,” he said.

Holland said, “We’re selling the marina to the tenants as a cooperative, and they get the rights to use a boat slip. We’re not selling a boat slip, we’re selling a marina.” But his company sent notices to existing marina renters telling them, “This is a great opportunity for a slip ‘renter’ to become a slip ‘owner.’ “

Attorney General Lawrence Wasden questioned how a marina owner at Bayview could be charging float-home owners $285 to $400 a month in moorage fees, when the state is only charging the marina owner $250 a year for the same float-home moorage right.

“It seems to me that we’re forgoing a significant amount of money by bringing in our lessee,” Wasden said. “Those numbers are pretty startling in terms of an asset that’s owned by the state, to whom the benefits of these assets should be accruing.”

Wasden said the state might want to weigh the comparative costs of doing away with marina leases and operating the marinas itself.

Holland, a Hayden developer, has bought up three marinas in Bayview as part of plans for upscale development, including a seven-story waterfront tower and “dock-o-miniums.”

Risch, an attorney, said, “Somewhere along the line it’s got to be made clear to these people that they don’t have anything to sell other than a period of time” that is part of a 10-year lease. “It kind of boggled my mind that someone was even out there talking about it.”

Mike Murphy, chief of the Surface and Mineral Resources Bureau of the state Department of Lands, said the department will send a letter to commercial marina operators “indicating where the lines are as far as what you can promise to a lessee. We’ve been very clear that they cannot convey more than they own, or in this case lease.”

A Hayden couple who own a float home at Boileau’s Marina in Bayview, Nikki and Tom Reeds, wrote a letter to the Land Board noting that Holland has more than doubled their moorage fees in the past year, and has told them he’ll likely form a cooperative to allow them to purchase their moorage right for between $100,000 and $200,000.

“If I should decide to pay Mr. Holland whatever he decides would be adequate compensation to him, will the state later decide that the whole idea is illegal?” Nikki Reeds wrote. “Mr. Holland will have our money by that time and we will be left adrift, so to speak.”

State Superintendent of Schools Marilyn Howard said the whole idea worried her. “If someone has the site, they’re now suggesting that the person should purchase this,” Howard said. “Can these people then re-sell their moorage to someone else? So are we creating this really bizarre kind of market that doesn’t have any rules associated with it?”

Looking around at her fellow board members, she said, “I’m seeing some nods.”

Howard noted that when state-owned cottage site leases, such as those on Priest Lake, sell for high premium prices, the state gets a share of the premium.

Said Risch, “We don’t share in the premium when a marina changes hands.”

Secretary of State Ben Ysursa noted that the Land Board manages the state’s lakebeds differently than its state endowment lands. The state constitution requires endowment lands to be managed for the maximum long-term return to the school endowment fund. But the lakes are a public trust, to be managed for public use.

“It’s not necessarily the biggest bang for the buck – it’s for the public use out there,” Ysursa said.

Murphy said marina owners get a rent break if they allow public boat-launching.

Land Board members said they need a comprehensive look at the how and why behind state management of lakes and commercial marinas, including possible reforms. In the shorter term, they authorized the Lands Department to negotiate with a float-home owners association, marina operators and other interested parties on appropriate rental fees.

Wetzel said he thought his client’s proposals had been misunderstood, in part because of Holland’s use of terms like “offering boat slips for sale” and “dock-o-minium.”

“Regretfully what’s occurred is the phrase has been used by many people including my client, but the concept hasn’t been completely fleshed out, and obviously the Department of Lands did not have all the information,” Wetzel said.

“Jim Risch is also an excellent lawyer, and if Jim Risch were to look at the dock-o-minium and how it operates, he would not call it a scam.”

Added Holland, “I’m amused at all the fuss. It’s not new, what I’m doing. It’s done in other states.”

Asked if some marina owners in Idaho already have “sold” boat-moorage rights, Murphy said, “I can’t speak to that. I know there’s been some rumors of that.”

Risch said he thought the attorney general’s consumer protection unit should be “right in the middle of it if they were trying to sell something they didn’t own.”

He added, “I suspect it isn’t going to go very far.”