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State board approves boost for cabin rents

| March 16, 2010 9:00 PM

BOISE (AP) - The Idaho Land Board voted Tuesday to boost the rent paid on hundreds of state-owned cabin lots on the shores of Payette and Priest lakes, properties that generate millions of dollars for public schools each year.

The board voted 3-2 to raise rents about 54 percent over the next five years, starting with a 9 percent hike in 2011.

The increase applied to 521 private, lakeshore cabins on state-owned land is anticipated to raise about $6.6 million in annual revenue, up from $4.3 under the existing terms.

Secretary of State Ben Ysursa, one of the three board members voting in favor, said the plan strikes a balance between elevating the value of state-owned land and fairness to leaseholders who have had the cabins in the family for generations.

Valued at $252 million, the lots are on land granted by the United States at statehood, and the board is required by state law to maximize their economic benefit of public schools, higher education and a state hospital.

"We have to be fair to the beneficiaries, that's our mandate," said Ysursa, who was joined in the majority by Gov. Butch Otter and Superintendent of Public Schools Tom Luna. "We also have to be fair to the folks that we've done business with over the last 40 or 50 years."

The opposing votes were cast by Attorney General Lawrence Wasden and Controller Donna Jones, both of whom argued the rent formula falls short of the goal of getting the best financial returns from state endowment land uses.

"I don't think it'll bring us to a true market rent," Jones said.

The vote comes a month after the board agreed the state should divest itself - through land exchanges or sales - from the cabin sites on Payette Lake in central Idaho and Priest Lake in the north. Rents at both lake sites, calculated at 2.5 percent of assessed or appraised value, have been frozen in recent years as state officials developed a new rental policy.

The new rate puts rents at 4 percent of assessed or appraised value.

The board also voted Tuesday for a compromise plan on so-called premium rates, paid when cabin leases change ownership.

Under the new formula, premium rents will be 10 percent of gross leasehold value or 50 percent of net value, whichever is greater. Leasehold value is the price paid by a buyer for the right to assume a state lease. Since 2003, sellers retained more than $25 million, while the endowment fund got $2.7 million.

But critics say the new policies will decimate the market for cabins on state-owned lands.

"Who in their right mind would buy anything, particularly in the next year, with the word out there" of a possible 50 percent surcharge on future sales, Chuck Lempesis, an attorney for the Priest Lake State Lessees Association, told the board. "And who would sell under those circumstances?"

Wasden said he is expecting the new rent rate policies to be challenged in the courts.