"I want to get going on it right now, and fix it as early as we can, because it's affecting the market big-time, this instability."
- Secretary of State Ben Ysursa

Top elected officials hope to reform lease system before 2010

BOISE -The State Land Board voted unanimously on Tuesday to freeze rents for state-owned cabin sites on Payette Lake for one year.

The decision brought an unusual round of applause and cheers at the board's special meeting in Boise.

"These are unstable leases," State Superintendent of Schools Tom Luna said. "Nobody would enter into an agreement where you could not predict within any certainty that your rent is not going to double, or increase by even 25 percent - that's not marketable."

I'm seriously concerned that our participation in this marketplace has disrupted the market activity, and undermined our long-term ability to obtain the maximum return from these properties," Attorney General Lawrence Wasden said.

"I do think taking a break here for a short time period, one year, when we can study this issue and figure out what's going on ... is in our best interest long-term," Wasden said.

Nearly 100 Payette Lake cabin owners who filled the hearing room in Boise listened closely during the special meeting as the board first considered capping Payette rent increases for next
year at 25 percent, then opted instead for a freeze.

When Luna suggested the freeze, an audience member whispered loudly, "Yes!"

Cabin owners have been complaining of skyrocketing rents that have jumped so sharply that no one wants to buy any of the cabins.

About two dozen homes are on the market, and existing owners fear they can't pay the rent.
Cabin owners build and own -and pay property taxes on-their cabins, but the state owns the lots underneath, and charges annual rent.

For 2008, rents for lakefront lots on Payette Lake were projected to rise 47 percent, and secondary lots, away from the water, were to rise 88 percent.

State-owned cabin sites on Priest Lake in North Idaho are projected to rise 15 percent, but they were not covered by the one year freeze.

Jim Young, president of the Payette Lake Cabin Owners Association, was accepting congratulations after the meeting ended.

"We asked for a rollback to 2006 levels; we didn't get that, but they did freeze it to the 2007 level," Young said.

"I think that will help stabilize the market and send a signal that the land board is working on this issue, and hopefully we'll see a resolution to this soon," he said.

The board agreed to form a "working group" to come up with more appropriate lease terms for state-owned cabin sites when existing leases come up for renewal at the end of 2010.

Secretary of State Ben Ysursa said he wants to start that work right away.

"I want to get going on it right now, and fix it as early as we can, because it's affecting the market big-time, this instability," Ysursa said.

The land board earlier voted unanimously to ask this year's Legislature to allow longer leases,
beyond the current 10-year limit for cottage site leases.

"When you put certainty into things it's easier to put a value on it," said Gov. Butch Otter, who chairs the land board. "I think we have to consider long-term leases so that there's certainty."

The land board is required by the state constitution to manage state endowment lands for the maximum long-term returns for schools. But Ysursa said hiking up rents to the point that it kills the market doesn't accomplish that.

"In my opinion, it is broke - it needs fixing," he said.

Ysursa also suggested that the state could move to an appraisal system to calculate values for its cabin sites, as it does already on Priest Lake, rather than relying on the county assessor's tax values, as it has done at Payette Lake.

State Controller Donna Jones called the one-year freeze "a reasonable step in protecting the income to our endowment while we're providing some level of certainty to the lessees."