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Monday, September 16, 2019  Spokane, Washington  Est. May 19, 1883
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News >  Idaho

Idaho to auction state-owned lots at Priest Lake

In another step toward exiting the lakefront landlord business, Idaho will auction 38 state-owned lots at Priest Lake this week.

Last year, the state auctioned 59 lots with lake homes on them.

Nearly all of those sales were to cabin owners who bought the ground under the cabins they already owned at the appraised value, which averaged nearly half a million dollars.

The state, which is charged by the Idaho Constitution with earning maximum returns for its public schools from the lakefront land that’s owned by the school endowment, is transitioning out of the cabin site leasing business, after years of fights over what constitutes fair-market rents and adequate returns for the schools.

“We hope to have a robust auction, and we hope to have a lot of satisfied customers,” said Tom Schultz, director of the Idaho Department of Lands, “and we hope to make a lot of money for the school trust up there.”

There’s another auction scheduled in September for nine unleased lots at Priest Lake, though they’re not necessarily vacant. In most of those cases, the current cabin owners couldn’t afford to keep up with the fast-rising lease payments and instead got permits allowing them to temporarily keep their cabins on the land; now, they’ve found buyers, who will be the ones bidding to buy the ground from the state and pay the owners for the cabins.

“This is an opportunity for those folks that were struggling, to allow them to exit gracefully and recoup some of their value,” Schultz said.

At both auctions, anyone can bid.

Former Spokane congressman George Nethercutt is the president of the Priest Lake State Lessees Association.

“I think we fought the battles to get them to do just this,” he said.

He said the sales will make funds available to the state to be used for education.

“They’re going to have a chunk of money to be used for education, and with all due respect to educators in Idaho, it isn’t the No. 1 state in the country for education,” Nethercutt added.

So far, the state of Idaho has auctioned off 126 lots at Priest and Payette lakes, garnering more than $52 million for the state’s permanent endowment, which largely benefits schools.

All those auctioned so far – and all those coming up – are voluntary, meaning the cabin owners asked to get into an auction and get a chance to bid for ownership of the land. So many cabin owners have volunteered for auctions that the state conducted a lottery, and gave the lessees priority numbers for auctions to be scheduled over the next three years.

So far, fewer than half a dozen of the auctioned cabin sites have drawn competitive bidding. Schultz said there’s some reluctance among people to bid against longtime cabin owners, essentially forcing them out. But he’s expecting more competition for the unleased lots. In each of those cases, the prospective buyer has paid a deposit to cover the cost of the auction; if that person is not the successful bidder, the successful buyer would reimburse the original applicant for the deposit, plus pay the cabin owner the agreed-upon, advertised price for the residence.

The process of getting Idaho out of the cabin-renting business has been long, acrimonious and marked by multiple lawsuits, but Schultz said at this point it can be considered “highly successful.”

“We have very clear objectives,” he said. “We know that we can sell these for no less than the appraised price, so we’re meeting our constitutional obligations. ”

Nethercutt said cabin owners are concerned that others have a shot at purchasing the ground under their cabins, that those who can’t buy have a viable exit strategy, and that appraisals used in the process are accurate.

“I’ve had this property since 1991, and every year we paid a lease payment, and this year our lease payment is about $15,700,” Nethercutt said, “which is really a lot for the time that we use it. … We have to think about, is it worth it to lease at this high price, or to buy, or to just walk away? My neighbor walked away.”

Schultz and Nethercutt agreed the process is clearer for all sides now than it was a few years ago.

“It’s good when government can explain what the process is, and people know what to expect,” Schultz said. “They may not like it in all cases, but at least they know what to expect.”

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