The cabin lease debate will resume Tuesday morning, when the state Land Board discusses 2008 rates for Payette Lake leases.
I have to admit, the leaseholders have a stronger case than I expected. Representatives of the Payette Lake Cabin Owners board came in Wednesday to make their presentation to the Statesman editorial board.
A few highlights:
• The 169 leaseholders are feeling the effects of rapidly increasing property values. If anything, they are worse off than landowners. If a property's value doubles, a property tax rate doesn't necessarily double. But when the value of a lease site doubles, the rental will double, since the rental rate is based on 2.5 percent of appraised value.
A case in point: Jim Young, the president of the cabin owners' board, said his 2001 rental, for a lot with 100 feet of lake frontage, was $13,225. The 2008 rental is expected to exceed $49,000.
• The rates are out of line with neighboring states. Recently, the Land Board offered up a pair of leases on North Idaho's Priest Lake, but had no takers. The reason, say cabin holders: the state's proposed rent was twice as high as the highest rental rate on Montana's Flathead Lake.
• The rapidly rising rental rates have also dried up the market for cabin owners looking to sell. Twenty-four of the cabins were on the market this year, Young said, also with no takers.
With all the leases up for renewal in 2010, the cabin owners are hoping for long-term relief. They hold 10-year leases and get first shot at renewal, and would like the Legislature to establish 49-year leases — in other words, the same special deal lawmakers extended to Tamarack resort developers a couple of years ago.
I'm torn on that one. Part of me wouldn't mind seeing legislators squirm under the precedent created by the Tamarack deal. But should the state let leaseholders lock in a lakefront site for 49 years at a time, with a right of first refusal that lets no other bidder in on the action?
In the short run, Payette cabin holders want a rollback to 2006 rates. For Young, that would equate to about a $25,000 rental next year.
The Constitution sets broad policy for endowment lands, such as the cabin sites, for "maximum long-term financial return." State code says this is long-term return is "best obtained through stable leases at market rent."
The Constitution and code are not at cross purposes. The trick is in how the state sets up the leasing system and the rental rates. That question falls the five-member Land Board — Gov. Butch Otter, Secretary of State Ben Ysursa, Attorney General Lawrence Wasden, Controller Donna Jones and schools superintendent Tom Luna.
David Leroy, a Boise lawyer and former attorney general, is representing the cabin holders. He says he hasn't counted votes to see how Tuesday's meeting will go.
The outcome should be interesting. Otter, Luna and Jones, elected a year ago, are new to the Land Board, and face an intriguing decision.
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waterfront
Waterfront lots are worth their wait in gold. The lease holders
had it good for a long, long time. If they do not want to pay the piper,
someone else will. The 24 cabins, built on the citizen's land, will
sell when the price is right. The cabin holders are holding out for high prices
because they think they can manipulate the Land Board into caving in
and giving them a better deal. Then they could sell for a much higher
price. The demand for the public to use and enjoy Payette Lake is huge.
Maybe the state should take back a bunch of these lots and make some
public use facilities. Now that would serve the citizens well!
Agree
Ditto on all points!
waterfront
Waterfront leased lots are not worth their weight in gold. One of the things the state is talking about doing is increasing the premium rent to 100 percent. The premium rent is a percentage of the sale price the state takes when the lease is sold. That means if you pay a million dollars for a waterfront lease, it could be worth zero to you when you sell it. Would you buy a leased lot with the current uncertainty surrounding the lease rates and premium rent? No one else is! I would not buy a lease lot at this time. Paying more for a deeded lot is a way better deal. The property taxes are currently 8 times cheaper and at least you know you can probably get your money back when you sell it.
Premium Rent
100% capture:
Yes they recommended that and they followed it up with the justification.
The state owns the land ..."it's reasonble to expect 100% capture of the increase in land value."
******
And the provisions allow a leaseholder to sutract the value of the improvements made. So if I put in $100,000 of improvements (cabin). Two years later the FMV of the cabin is $120,000 but I can sell the place for $150,000 the state would get the difference of $30,000 - that's the implied value created by the land itself.
The FMV of the cabin is mine, increased or decreased.
~That seems reasonable to me.
Cabin Welfare
The SpokaneReview mentioned when the Priest Lake leases were up for auction, the audience (current leasees) cheered when the auction was closed with no takers. Let's see,,, a small town where everyone knows everyone and I want to go in and bid on a lease where my would-be neighbors are standing next to me, and they have a HIGH interest in me not bidding. IF they were not there to bid, why were they there? To intimidate perhaps?
49 years? Heck no!
A 49 year lease for Tamarack is MUCH different than a lease for one cabin on a resort lake. Even 10 years could be too long. The lake leaseholders do not a have dock to stand on.
The rates should be market rates. What is a typical lease rate as % of FMV in other resort areas in Idaho?
And KR, what are you talking about "when the property value doubles, the rate doesn't double." No kidding. BUT the tax does double. The Assoc. rep refuting the question of doubling the lease rate to 5% has nothing to do with appraised values.
Does the lease agreement allow current leasees to sublease?
A stonger case than you expected? What???? Did Mr. Young take to lunch at the Arid Club and invite you stay at his cabin or what?
OK, hold on here ...
I never met Young before yesterday. I'm just saying I went into the meeting extremely skeptical, and expecting not to be persuaded.
I think their arguments have some merit.
I'm frankly less concerned about Young and the other cabin owners than I am about the state getting a good return on endowment lands. I care about what the lands bring in for public schools and other programs. If we price the leases so high that no one wants to bid or renew leases, how exactly have we helped the endowment and the schools?
The Land Board has to find the sweet spot. These folks argue that the state has overshot the market. I don't reject their argument out of hand.
Kevin Richert
editorial page editor
Merits
So why were you persuaded to 'lessen' your previous op ed position?
You say their arguments have some merit, but don't show where the merit is.
Previous auctions went unfilled @ 5%? Is that sufficient evidence for you? Or can we learn more about the circumstances like advertising, terms, which particular lots. They were probably undesirable locations or the previous owners would've continued with the lease. Let's have more info if we are to form a decision based on the last attempt to increase rates.
Current ones for sale.
Lots up for sale must mean they want to profit off the lease rights and/or location.
Is there a single property currently not being leased due to being too expensive?
If the rate is raised to 5% what will the end result be? Half of them not leased? That would be about the same revenue with half of the properties available for something else.
Yes, the Land Board has to find the "sweet spot" if they are to continue leasing cabins. That's a tough trick for 5 politicians. And why I would advocate the state get out of such business.
Merits?
Udapimp says: "They were probably undesirable locations or the previous owners would've continued with the lease."
Given that statement, I wonder how informed you are on this issue. First, they're lakefront lots - pretty desireable locations. Second, the owners can't afford to continue with the leases because they're too high.
You make it sound as though these leaseholders are simply trying to profit off state land, which in most cases is far from the truth. Generally, these lots are for sale because the lessees can't afford the leases anymore. I know several of them - most of them don't want to sell but feel they have to, and are looking at losing their entire "investment" because there's literally NO market.
Relatives
Undesireable is a relative word.
So a 100ft of lakefront property smashed in between two high traffic properties (front of neighborhood) is not the same as the end property with 200 ft of easy dock access. The assessed value 'should' reflect that difference in the lease rate. Perhaps less 'marketable' would be a better word. Those that are less marketable are going to be tough to sell at top dollar.
The cabin leases for sale are in the boat as the million dollar lots in Boise up for sale. That's a risk they took and the state's policy doesn't need to accomodate them simply because they will not be able to cash out for as much as they want to.
I don't think they are simply trying to profit off state land. I do think they are trying to preserve their sweet deals at the expense of the rest of the Idaho taxpayers.
As for being informed about the issue, that's what I'm trying to do. You might also notice I did read the SR review, Land Board website, minutes, statutes, etc. I suppose I could drive up there and view the properties, research the owners, etc. But then that's what I would expect from a journalist writing an article about the topic. Hence, I'm asking for more info instead of simply accepting the editors position. Perhaps you could share what you know regarding those you know.
Fill me in here...
Isn't some of the infrastructure, like utilites or water and sewer not the most wonderful for some of those spots? Were there some ecological concerns?
Was I watching Entertainment Tonight half-asleep?
ET does make you deathly drowsy.
Cabin Lease for Sale
Low and behold- 1047 Pilgrim Cove (that's McCall for the newcomers):
Sorry for the long URL.
http://realestate.yahoo.com/Idaho/Mccall/Homes_for_sale/62a02ed5687a819026bf43225b035f?cc=realestate&p=Mccall,%20ID&priceHigh=&priceLow=&nodeId=750007014&radius=&bedrooms=&bathrooms=&type=&sortBy=bds+2
***************
For sale at $975,000.
The 2007 Lease was $15,836. By my math the lease is 1.6% of the asking price.
IF the lease is 2.5% of the land ($633,440) then the building must be $341,560??? I don't think sooooo.
Or is the building really worth $975,000, since the lease is a separate payment for the land only. So if the State sold the whole deal it would be $1.6million+ (plus a premium since there wouldn't be a lease anymore). At 5% return on the cash, that would be $80,000 going to the endowment fund instead of the measly lease of $15K.
Isn't the Internet wonderful!?!
Cabin Lease for Sale
IF the lease is 2.5% of the land ($633,440) then the building must be $341,560??? I don't think sooooo.
Why not? That seems about right to me for 56 of frontage. The price does includes the purchase of the lease.
But would you pay a million dollars for this lease and cabin?
You have no idea what the lease rate will be in a couple of years AND
the state could take 100 percent of the proceeds when you sell the land!
Also, try to get a mortgage on a piece of property with only a 10 year lease (in this case there is only a couple of years left on the lease)!
Most banks want at least 5 more years than the term of the mortgage. For a 30 year mortgage, they want a 35 year lease.
Why Not?
Is the building worth $341,560?
I'm pretty sure I can build a duplicate of the building for less than $341,560.
I do have an idea what the lease will be in a couple years- 2.5% of the land value, maybe 5% if the proposed increase goes through. Your point is the same as any homeowner buying a new house. What will the property tax be in five years??? Who knows?
State seizing the proceeds? For what? Back lease payments?
It's tough to get a mortgage on 10 year lease?
Let's bifurcate this into two parts. One the land, and one for the building.
Empty land- will a bank loan me money to LEASE empty land. No.
Building- will a bank easily loan me money for what might be a mobile home? Yes. Favorable rates, probably not.
So for any argument on the loan aspect I would compare the cabins to A High Class mobile home park on the lake. Yes, I know some have foundations and ordinance say what type of homes can be there...but effectively the land is leased and home is owned; just like mobile home park.
More Cabin Welfare
Here's another for sale at $298,500.
MLS #98318889
2007 lease is $3,356 -that's 1.1% of the asking price.
IF the lease is 2.5% of the land,,, the land must be $134,240. Use MLS or Google it, to take a look at the 768sqft cabin built up on blocks. So the land si $134,240 (hence the low lease) and the shack alone is worth $298,500? NOT!
So don't try to say there's NO market at a reasonable price. The current sale prices are not reasonable. Not in a hot real estate market and certainly not in our current market.
And 5% as a reasonable rate assessed to the whole property, based on that sale price, this lease would be $21,712/yr for someone to sublease the whole place. Outhouse included!
Do I need more examples????
HMMM? Hey neighors in our association, how about if a few you list your places for a REALLY high rate so they don't sell, then we can cry to the Land Board these places can't sell cause no one wants to buy them w a 10yr lease so we need 49 years.
Jack up the rate to 5% (fair) and use the for sale prices for FMV. Then let the chips fall where they may.
Better yet, sell the land to highest bidder over the next 10 years and be done with it. Give the leasees first right to buy AT FMV(!). Then we'll see if they are paying a fair amount.
Enough?
I just can't get enough of this...
So,,, I challenge the Statesman to get a list of the 160+ leaseholders on Payette Lake. KR, I'll bet you lunch that list contains, politicos, lobbyists, old time Boise business owners from 'the club' (obviously), and maybe even a few surprises. Of course you have to follow all the 'shelter' names (LLCs etc) to the real owners.
Enough?
They can easily get a list from PLCOA and leases can only be in individual names not LLC's or corporations.
Okay, here's an easy one
Mike Fery.
From the SpokesmanReview:
Mike Fery, who has a cottage site at Pilgrim Cove on Payette Lake, said, "My cottage site rent has increased an average of 27 percent per year since 2001. In 2001, it was $5,000. In 2008, it will be $32,500. … It's not affordable, not attainable by 99 percent of Idahoans."
*************
As long-time Boiseans know, Mike Fery is a son of John Fery, former president & CEO of Boise Cascade (the company that was until it was run into the ground). Mr. Mike Fery currently is a significant businessman in Boise in the hotel/motel business and his list of business associates is longer than the Boise River. The Fery's are definitely in the top 1% of Idahoans he mentions. The Fery's are so far away from 'middle-class' they make the Governor look poor. Kudos to them. They are great people and an asset for the Boise & Idaho community, but they're not not middle-class.
Add to that, the Association's attorney is David LeRoy. Well, when you are in trouble in Boise, LeRoy is certainly on the short list of attorneys.
Kissing Cousins
The previous Payette Lake Cabin Owners Association president:
Chuck Hervey.
Mr. Herveys' cousin is Jerry Conley, former Director of Idaho Fish & Game. I know,,, it's a small town.
Keep in mind state employees, officials et al can not be lessees. Relatives of state employees? Who knows?
http://www.greatlodge.com/idFoundation/fall02.pdf
State Lease Holder
That list is readily available and I assure you that the majority of the families are like us--caught in the headlights, trying to hold on to a family heritage.
We are retired and have never been wealthy--I taught school and my husband was self-employed. Our parents were far-sighted enough after returning from WWII to buy a 99 year $25.00 state lease and they hand built a 800 sq ft cabin on it. Our children and grandchildren have grown up on this land and we have struggled every year to scrape up the lease money and have gone in debt to do it. We feel the importance of family is enough for us to sacrifice large homes, vacations and luxury cars and boats to keep this for our family. Most of our neighbors are middle class families like ours. Some families were able to trade the land with the state for the market value, but we could not afford to do that.
Now that we have to sell, we cannot because there is no market. No one wants to be shackled with the weight of uncertainty and to be at the whims of the State Land Board.
I assure you that we are not a shelter name. I cannot believe the envy and cynicism reflected in your comments. Why didn't you buy a lease when the price was right?
Stories
I like hearing the background of your place.
99 year lease? I don't understand how you would be under a 99 year lease when others and the current term is 10 years?
Again, your story is the same as many others. Farmers for example, third generation farms can't afford to continue 'their heritage' of farming because of one thing or another. Many are not able to pay the property tax (albeit low w/ ag exemptions). That doesn't mean the rest of the taxpayers, whom are trying just as hard to make it, should be subsidizing your exclusive deal.
You can't sell yours? Is it listed? For what price? Direct us to a link with pictures and perhaps someone will be willing to buy it.
Why didn't I buy/lease? Until I read about it last month, I wasn't aware there were such sweet deals being supported by the taxpayers. Per se, it seems the deals would be known just to a hand full of potential people, hence my suspect of the likely leaseholders.
I'm not sure if I could enjoy summers on such a prime piece of property knowing I was leasing it from the Great State of Idaho for only $3,400/year.
State Lease Holder
I can see that you were ill-informed about state leases. They certainly have been around for a long time.
The 99 year lease is what the state was offering then to open up the land to veterans returning from the war. The State Land Board cancelled the 99 year leases in the 1960's.
I don't know where you find any lease for $3,400 a year--I wish. Our lease this year is $30,000. I have never asked for subsidies like farmers do. We have carried our weight and willingly helped to support the education endowment fund. But the state has gotten greedy at the lease-holders' expense.
No one wants to buy the leased property for even half the market value, so the state is stuck with unwanted property.
Here is it
Here is a lease for $3,356. I listed it in an earlier post. It is on the MLS (real estate network). A simple Google showed the info to me.
More Cabin Welfare
Submitted by udapimp on Thu, 11/29/2007 - 8:40pm.
Here's another for sale at $298,500.
MLS #98318889
2007 lease is $3,356 -that's 1.1% of the asking price.
State Lease Holder
You don't say where it is, so until I know location, your figures don't mean anything. Obviously it is not lakefront--it might be 3rd or 4th tier.
If that is on the market at that price, you better buy it.
The Valley county assessed value of ours is $1,200,000. The private appraised value is 890,000 at market value. The leases are based on the assessed value. Our problem is with the elevated assessed values.
Idaho Oceanfront
It says, "lake access" and has a pretty picture of the lake with docks. So I doubt it is 'lakefront'. Does 100ft away count? But the percentages and the dollars are the important part, not which parcel it is.
My figures don't mean anything?
So $300,000 for a 768sqft shack doesn't mean anything?
A lease of $3,400 for .32 acres of lake access in nice Pilgrim Cove doesn't mean anything?
I showed the URL above. With a simple copy/paste you can actually see the pictures. As a resident there, maybe you know of the place.
>Elevated assessed value?
I know what you mean! I got the same problem right here in Ada county!
But I'm not leasing the land at 2.5%.
I'm Ill
Yes, I'm ill-informed. Just like a lot of the taxpayers. That's why we like to read the news occasionally. Unfortunately, sometimes the news is biased to certainly flavor. For example cabin leaseholders stating Idaho's lease rate is too high compared to other states. That was in the SR and now it shows up in the Editorial. And it's being repeated by the leaseholder- despite it being untrue.
One does not need to 'ask' for a subsidy. Sometimes they just happen.
State has gotten "greedy"?
Yes, increasing the rate to 5% is being greedy. Despite the market investment rates, despite other states' lease rates, despite the actual dollars involved for million dollar properties, and despite the demand for property on Payette lake. Greedy? Give me a break.
No one wants to buy @ half the market value?
Is anyone trying to sell for half the true market value? Today? What's their phone #? Let's help them out.
Stories
When the 99 year leases were up, the state renewed them for only 10 years.
You don't seem to get it. The leaseholders pay a lease instead of property tax.
The lease rates are now about 8 times more than property tax. If you were looking for a lot in
McCall, would you buy a lease lot or a deeded lot? Do a comparison and you'll find they are not
such a sweet deal.
As to your ignorance regarding these "sweet deals", why would someone who is selling their lot only let
a handfull a people in on it? THAT MAKES NO SENSE. These leased lots are mostly sold through realtors
who list them in the MLS! You yourself said you found 2 listed on the Internet. Call up any realtor and
they can find 24 leased lots for you -- oh but wait, maybe they won't tell you about them because they don't want a
commission. Yeah right!
99 Years
Ooooh, so when the 99 year expire it will go the current 10 policy.
So Retiredteacher still has about 37 years left on their lease.
I'm pretty sure I get. A lease. Not property tax. Although you do pay property tax (personal property tax) on the buildings.
8 times more than property tax. Okay. So what. The property tax on my investment rentals is significantly less than what I charge tenants.
A leased lot or a deeded lot. That's like asking, "would you rather rent or buy your house?"
Handful of people?? Are you referring to my suspicions about the leaseholders?
It a lot about 'who you know'. And in Boise/Idaho that runs deep.
State Lease Holder
That would be great to have 37 years left. The 99 year lease was purchased in 1946. The state changed the leases in 1960's and renewed them yearly until the last 10 year lease. There are no 99 year leases left, because the state canceled them.
We pay property taxes on a "tear-down" cabin that our appraiser valued at $00.00, but Valley County believes it should be taxed.
I know no one to help us out, except the PLCOA as a support group.
Thanks
Thanks for the clarification RetiredTeacher.
That darn invstg8 is just throwing inaccurate information all around! ;-)
Why would that be great to have 37years?
You value your 'tear-down' at $0? That's funny! So when you sell your place, it'll be for one dollar, right? Please call me.
Although, that's the same thing I tell the county appraisers about business computers. "They're obsolete" I say and "worthless". The county still believes 3 year old computers should be taxed. The nerve!
You cabin owners are a funny bunch!
I'd like to party with y'all sometime. I'll bring the whiskey. And you can charge me rent for sitting on your beach.
Stories
That "prime" piece of property leasing for $3,400/year is a second-tier (well back from the lake) small lot. I searched the MLS number and couldn't find the lease payment you quote.
Phone Call
I called a local realtor to get the amount.
I never referred to it as prime.(I stand corrected. I did say it was prime. And I'll say that again. The land is prime, the building is not.) I referred to it as an OVERPRICED shack. Thanks for confirming that for me since it's "well-back" from the lake.
p.s.
Second-tier? Oooh. That just sounds so second-class. Icky! Only a small 1/3 acres- that's sooo second-tier.
I guess I dont' want that one at any price. It's only lakefront for the da pimp, baby!
Stories
oops - hit it twice
As I recall...
it once had the name of my uncle on one of them...a few other non-berzerkoids like them too.
Cabin Leases
My great grandfather built his cabin in McCall in 1936 and signed a long term lease. We are not a family of politicos or business owners. We have had a good thing for several years but at a proposed fee of 40,000 plus per year we will no longer be able to keep up with the payments. The proposed rate of 5% in the upcoming years will push the payment to almost 75,000.
Currently unless we esentially give the buildings away we will not be able to sell. Not becuase of prices but becuase buyers are unwilling to purchase a lease unless it is a long term lease of more than thirty years.
I realize we have head it good for several years and I am not against paying a fair market price but honestly our rates are much much higher than lease rates in any other state in the country. Additionally the developers at Tamarack resort have a much better deal. Why do we give a resort with out of areas investors better rates than our own citizens?
Bummer
Fedup,
Your implied situation is much like the little lady in the Boise North End who says she can't afford the property tax on her million dollar home. Would you personally like to send the little old ladies some of YOUR money to help her out?
"give the buildings away".
Please look at the two properties I listed. The one is a shack. Sorry property owner, but really, $300,000 is not realistic. You CAN sell at the right market price. And a 10 year lease is a long-term lease. Essentially you are saying NO ONE has sold their property in the last tens years. Is that true?
Higher than other states??
HS!!! Here are other state rates:
http://www.idl.idaho.gov/Bureau/smr/cottage_sites/lease2007/residential_site_leasing_rate11.pdf
Utah- 8.25% variable to prime interest rate
Wyoming 5%
Montana 5%
Tamarack is bring MILLIONS of dollars into the economy. Tamarack is investing MILLIONS of dollars in permanent infrastructure. When the leaseholders decide to build a new resort on Payette Lake, perhaps the state can give additional consideration to the situation. Whether they are in-state or out is irrelevent.
A good recommend compromise is to raise the rate, base in on FMV instead of tax base, and extend the lease-term.
Out of state investors
Fedup wrote: "Why do we give a resort with out of areas investors better rates than our own citizens?"
Fedup,
Look at the list of Board members for the Priest Lake cabin association. They are ALL from Washington- out of state. http://plsla.org/
Well doesn't that make sense?
Do you know where Priest Lake is?
Really close to Canada, not to mention they get mostly Washington TV and Radio. Grandma's sister lives there.
Strong Opinions, Little Knowledge
Dear Udapimp:
I read with interest your comments on the cabin leases for Payette Lake.
I find it interesting that you have very strong opinions and that you
seem to be sure there is a "conspiracy" in the making. However, much of
what the you contend is the result of your imagination. It clearly does
arise from a great deal of knowledge on your part.
Who are you?
What is the reason for your hostility?
Contentions?
Thanks for your interest.
That is exactly my interest to display information for everyone to understand the situation. For example the misinformation propagated by Fedup of other state's rates. The same issue came on with the Priest Lake leases, using Flathead Res (MT) as a reference. The Land Board Study shows contrary evidence. I'm sure the Association reps said the same thing to Mr. Richert. Spreading wrong information to influence other to the leaseholders benefit.
Conspiracy?
This aint the Warren Commission so relax. Just because the Leaseholders are organizing to influence public opinion in their favor, doesn't mean there's a conspiracy.
Imagination?
As you can read for yourself, I have provided evidence for what I'm writing. Uniquely so, I might add.
Arise from...
Not sure if you had a mistype or if you are complimenting me on my research of the topic. Thanks in either case.
Who am I?
I'm Idaho. Idaho, as in a citizen. Your neighbor perhaps. ;-)
Hostility?
Your misread. I love everyone!
Udapimp
It's interesting that I recognize your username from some other blogs/chats. Your comments and attitude are similar also: light on the facts, heavy on the inflamatory remarks. It sounds like the editor Keith fealt the presentation was pretty straight forward. Kind of wish you were there, but not sure if that would have been very constructive.
I hope the other bloggers will focus on the facts and realize that Udapimp is seeking attention and controversy and not facts.
Enlightenment
Please enlightment me on where I have not used facts. Or perhaps you can refute the facts that I have presented.
My assumption (guess) is on the list of leaseholders.
Were you at the presentation, Carl21?
Selling Leases
"The cabins will sell when the price is right." Right now, there is NO price. Under the current circumstances NO ONE wants to buy a cabin on leased property. A large number of leaseholders will have to walk away from the property when their lease is up because the payments are too expensive and the property isn't marketable. Who would pay up to $60,000 per year to "rent" a cabin lot? Plus pay property taxes on the structure, but not have any of the benefits of ownership or control over the rate charged? Lease payments are not tax-deductible, as is property tax. The land board establishes its lease rate based on assessments by Valley County, which values the property as if it were deeded. Detailed financial analysis (NPV) presented at the IDL subcommittee meeting clearly shows the current value of leased property is negative under the proposed agreement. (Yes, I was at the meeting.) Is it really in the state's best interest to completely wipe out the leaseholder value and therefore the market for these properties?
Why is this framed as an "us versus them" or a "rich versus poor" issue? Is it because it's convenient and plays into popular stereotypes? We'd be happy to get our investment (sunk costs) out of the property and never work with the state again, except when we pay our taxes. And yes, I'm a fourth-generation Idahoan, not an out-of-state "fat cat".
I'm with ya.
For example, the above reference shack for $300,000. Is that what it cost lessee to build in 1957? I don't think so. Inflation adjusted if you like. Or more appropriately, what would it cost me today, if I lease that lot as a bare lot and built that same shack?
That price is too high and that's a big reason it's not selling.
4th Gen is willing to sell his building for the amount he paid for it. Again, let's help out here. What is that price? Is it currently listed? Granted, IF you paid TOO much for it, that's your fault.
Right now there is no price.
Try telling that to the 964 people who own properties in foreclosure right now(yesterday's news).
$60,000 to 'rent' a cabin lot?
On Payette Lake? With first rights of renewal? Sounds a like a 'reasonable' deal for a million dollar parcel for someone in the market for million dollar properties on the lake.
I don't think it's 'us vs. them'. I think it's the state doing what the right thing. I don't think the state should not be in this 'business' at all. But if necessary, the state has to charge market rates. Market rates mean similar to other states, and what the market will bear. Whether someone is getting pushed out of their family cabin is not the point. That's unfortunate. But as KR said in his original op ed, the state has to consider the million citizens over a minority 164 leaseholders getting a good deal.
Rent?
Sixty thousand dollars per year and you gain virtually no equity, except for the building/improvements, no matter how pristine and beautiful the setting?? Run the analysis and tell me what the investment's worth. Wait, you don't have to---it's negative. The property owner would have to pay you to take the property off their hands.
Worth
I wouldn't say it's negative. It's zero. Because it's not an investment. Just like renting an apartment. An expensive apartment in this case.
BUT if I don't have to rent a cabin from a McCall property manager every time my family goes to McCall, then the lease rights do become valuable. What's the NPV of that?
Not the same
It's not the same. Leaseholders do NOT have the right to sublease their property. If you don't rent in McCall, the property manager can rent to someone else. That creates a market for the property you didn't rent. Leaseholders don't have that option.
Not the Same
You're right they're not the same.
They're not the same, cause I'm not talking about from the owner's (prop mngr) perspective. I'm talking from the lessees perspective. And then they are substitutes. Econ 101 tells me I should compare my substitutes.
So when my buddy charged me $100 to stay at his Pilgrim Cove pad, he shouldn't have done that?
More Cabin Lore
Ya'll are really making me work hard today.
"Leaseholder do NOT have the right to sublease"
4thGen, I don't have a copy of your current lease, maybe you do. But the proposed lease allows subleasing with written consent and says consent "shall not be unreasonbly withheld".
So hey, you are gaining 'something'! Isn't that great?!
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http://www.idl.idaho.gov/bureau/smr/cottage_sites/lease2007/oct1/cvrabc.pdf
Selling Leases
This was mistakenly posted twice.
Cabin Lease Increases
Hummmmm, my mind is reeling with positive and negative energy as I read opinions concerning the increasing cabin lease fees.
So I am going to try to clear my mind of blogeeze and give clear thought as to my opinion.
We were fortunate enough to purchase a cabin on state lease property in 1978. Yes, it was not much money but then the cabin was
not much either....no running water and for summer use only. We took the chance that we were making a wise investment and after using the dry cabin for 15 years, we
decided to dig a well, add a foundation, put in plumbing and actually put sheet rock over the tinfoil covered insulation that we had used for wall covering to keep warm in
the winter. We have had great times with our family over the years and have been thankful that we could enjoy all that McCall offers both summer and winter. We are not wealthy but middle class I guess...is there still one of those?
The price increases for the leases have gone steadily upward and we continued to pay because we felt privileged to be able to enjoy the land. The 2.5% assessment was a little
scary not knowing what was going to happen in the future and we were paying close to $2000 in 2006. We are on the third tier and along with the 2nd tier, these cabin sites are in the majority; not as sought after as the lake front sites obviously. Thus, less people interested in them when attached to high lease rates.
Now this year we were informed of increased valuations and that we would be paying close to $5800 in annual lease fees. After an appeal, our valuation was lowered and the fee was dropped to around $3700.
My feeling is this. It is the Land Board's responsibility to get the most revenue they can from state lands. I understand that. But if the lease fees are so high that the properties cannot be sold, and the lessees are forced out and there is no one in the middle income level who will buy them, doesn't that mean that eventually the state will make less money because the land is sitting unused with no rents coming in to the State and no one to care for the land that the empty cabins are sitting on? In the end, the values will come down due to lack of interest; the lease rates will go down and we will be back to square one - offering state land for lower lease rates to new renters, since families were forced to leave cabins vacant. So what will the State coffers gain?.....a big mess, inconsistency, potentially less money being earned for education and prisons and money spent trying to keep up vacated cabins and land. Let's come up with a long term equitable solution please.