Business

Opp Out Could Signal Land Policy Shift

The resignation of Dept. of Lands Deputy Director Cathy Opp and the revelation by the Statesman’s Dan Popkey that legislators have turned down donations from leaseholders of state-owned recreation lots at Payette and Priest Lakes, signals a possible policy shift of Idaho Land Board activities.

The board is comprised of the five state elected officers with the exception of the treasurer (controller, governor, secretary of state, supt. of education, and attorney general. The state endowment lands are managed by the Idaho Dept. of Lands.

The IDL has followed directives from the board to divest the recreational property because it seems to be a pain in the bum to administer and not a big money maker. Through sales, purchases, and trades IDL has gotten into the commercial rental property business and they even own and operate a commercial storage firm in Boise…all tax exempt property which hurts revenues to cities, counties, and other local taxing units.

The commercial ventures were the brainchild of IDL deputy director Cathy Opp. We learned last week Opp has resigned following what appeared to be a series of off the record meetings by land board member’s staffs. That’s to say there may be a policy shift away from the commercial property business by the state. With Sec. of State Ben Ysursa leaving office along with Ed Super Tom Luna, there is a potential change in attitude among the yet to be elected new members.

In June 2011 Gov. Butch Otter called the venture into private business on the part of the state a MISTAKE.

Opp once told the GUARDIAN she would purchase Sun Valley (for example) or any other properties if they had a good return for the Education Endowment fund.

Two more recreation land auctions are coming up. It is nearly impossible for anyone other than the current leaseholder to win. The minimum bid will be the appraised value of the lots, but if a bidder other than the lessee wins the auction, they must pay the current lessee the appraised value of the cabin and other improvements in addition to the bid price paid to the state. Last auction saw nine out of 10 sales go to current leaseholders.

The name of the game is to get a low appraisal for the state land and a high appraisal for the private cabin improvement.

The Payette auctions will be held in Eagle during the first week of April; the Priest auctions will be held in Coeur d’Alene, perhaps by the end of summer.

Comments & Discussion

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  1. Bill Goodnight
    Feb 9, 2014, 11:46 pm

    Yes, the administration of the Priest and Payette lease lots is a pain in the bum to the State Department of Lands and the Land Board.

    Many articles have appeared in the press that tend to elicit sympathy for the lessees.

    However, omitted from these articles is the fact that nearly 90% of the 354 lease lots on Priest Lake are held by non-residents, mostly from Eastern Washington.

    I do not feel that it is xenophobic to point this out when non-residents have disproportionate access to Idaho resources and are influencing income to our schools by complaining about below market rates for their cottage sites.

    It is well established in Idaho law that residents have primacy over non-residents. We charge them much higher fishing, hunting and college tuition fees.

    Now these lessees are trying to influence Idaho lawmakers through campaign donations. Most of these folks are not even constituents!

    The State Land Board faces a difficult problem in dealing with these long-term lessees, but surely the primacy of the needs of Idaho school children should overshadow the interests of Washington residents.

    EDITOR NOTE–Bill, the GUARDIAN posted a story in 2012 about the north Idaho issue. Your note has some strikingly similar language. Good points on non-resident fees for college and fishing/hunting. http://boiseguardian.com/2012/07/26/90-of-priest-lake-cottage-leases-held-by-out-of-state-residents-90-of-payette-sites-are-idahoans/

  2. Richard A Evensen
    Feb 10, 2014, 4:58 am

    This good old boy favoritism must be stopped. Current lease holders display a sense of entitlement, arrogance, and greed. They have NO special rights to this land over any other citizen. They are RENTERS, period. They rent the lot for a specific period of time.

    If I make improvements to a home I am leasing for a year, I have absolutely no right to demand payment for those improvements should the owner decide to sell the home after the end of the lease.

    Citizens need to keep a sharp eye and bright lights on this process. Can any one explain who decided on the rules requiring that current lease holders must be paid for improvements that they chose to make on rental land?

    There should be a real open and public option of ONLY THE LOTS. If the current lease holder does not win the auction he can deal with the new owner of the property or remove his improvements.

  3. I encourage everyone to read the lease. It addresses the Personal Property in length. http://www.idl.idaho.gov/bureau/smr/cottage_sites/2014-Cottage-Site-lease-template.pdf

  4. 3 auctions occurred last fall. All current lessees were outbid. Details here:

    http://www.spokesman.com/stories/2013/dec/05/two-priest-lake-cabin-owners-lose-state-leases/

  5. Richard, Your post to the Statesman essentially says that a nice house – $2 mill was your example , reduces the VALUE of the states endowment lots ….. Sorry , but I beg to differ.

    Most land use economics ratios – for recreational land – assume something between 15% and 25% as the land portion of the total unified estates value. So – since the State and IDL desire working this equation in REVERSE order ( which does not work ) they CLAIM the Payette Lake waterfront lots they own are worth around $1 million each.
    They get this number by taking the FULL purchase price of any recent ( arms length)transactions and deducting the appraised value of the improvements. Many would argue … that IDL intentionally undervalues improvements , in order to overstate the value of their underlying land.

    Are the lots worth this amount because of the lots inherent value OR perhaps due to the value of the homes on them ?? If the former – Why are there 15-18 – empty IDL lots at Payette Lake that are sitting un-leased ?

    What – nobody else wants to spend $50,000 per year to camp out? The lake is indeed absolutely gorgeous – but if I want to CAMP – I can do so at the state park for $35 per night going nite to night. Cherry picking the best weeks of the entire year. Also, please explain why IDL is leasing a waterfront lot – with a fully furnished 2 bedroom home on it – for $1,200 per month on a yearly rental arrangement ? This yr to year agreement- grossing $14,400, allows the tenant to use of the exact same lakefront, that his neighbors pay $40 to $50 thousand a year to use, and they are tied up into multi-year leases. So , IDL can ONLY find year to year renters – for fully furnished cabins – at 1/3 to 1/4 the price of the good folks holding multi-year leases. TIME FOR SOME AUCTIONS. REAL AUCTIONS.

    So, if ANYONE really wants into this mess ….. they need not pay ANYTHING for improvements. The article mentions that 3 of these BARE were auctioned off in December – it says 2 went for a minimal premium to appraised value. The 3rd – DID indeed sell for a massive premium – what the article conveniently OMMITTED was that the lot sold to the neighbor owning the adjacent deeded lot. So, this sale is non-arms length for comparable purposes as the lots buyer had “motivation” to expand on his existing estate.

  6. Richard A Evensen
    Feb 10, 2014, 6:18 pm

    Thank you for the reply Gonzales. You did add to my understanding of the situation.

    First, to clarify, I said that having improvements worth $2,000,00 that must be purchased with the lot, greatly shrinks the count of possible bidders. That devalues the lot.

    Second, the empty un-leased lots at Payette are not lake front property. They should be simple to sell, not lease, for whatever the market will bring. I believe the current lease on those properties would be more like $800 to $1200 per year.

    Third, many would argue that current lease holders have great influence in getting very high appraisals on improvements to limit bidder interest and make lot purchase attractive only to them.

    What I am saying is pretend all improvements on a prime lake front lot burned to the ground and the lot was cleaned up to natural state. Auction it to the highest bidder. That establishes real value of the lot, the State gets their money, the new owner does as he pleases on his land. Absent a fire, the State does the same thing. The new owner negotiates with prior lease holder. BOTH parties are denied use until agreement is reached. Both are VERY motivated to reach an agreement. The State is out of it.

  7. Grumpy ole guy
    Feb 10, 2014, 7:57 pm

    The larger issue here is that the State removes from public use these lots and allows them to be reserved for single users for a specified period of time. The State provides some improvements for these individuals for which all tax payers, pay. So be it, I assume that, somehow, those costs are figured into the lease costs (but, I doubt it) So long as there is public access, and public provided roads, boat ramps, picnic areas, camp grounds, there is, presumable, some amount of equality of public service available; so, therefore the tax-payers are being served on these public lands and water-ways.

  8. Richard I kinda like the sales idea you offer but, what if…
    Say you hold the lease.
    I buy the lot by winning bid.

    Now, you and I have to agree on a price of the building. You have an incentive to have an outrageous high price. There is nothing that holds you to agree to a reasonable sale price to me. So you hold out. At some point I say, “okay how about if I sell you my land?” — at a premium profit for me, but still a huge discount to what you have had to pay to get lot and building.

    Denying use of property to someone??? That level of “motivation” borders on duress and both those points likely have problems in court.

  9. Richard,

    We are NOT far off, but still I fear somewhat at cross purposes.

    Your first point might be only a matter of semantics, very few people can afford a Bugatti automobile ,(small pool ) that does not mean it SHOULD be discounted so MORE can afford it. Recall that when our hapless John Doe, decided to build his $2 million dollar house , which he can now enjoy year round , with room for his family and maybe some friends, on a leased lot, the state encouraged him , mightily, through the right of continuation , which Wasden’s Law struck down. So, there is that issue to absorb. Bit of a bait and switch , you might say. Plus, John pays property taxes on whatever Ada County tells him it has for value.

    There ARE at LEAST a dozen , I have a
    List I reverse engineered myself, of waterfront lots sitting empty at Payette. Some $15 million of value , if you believe the IDL’s numbers , drawing NO income. I am happy to provide the list to you for review. i believe there are actually 15 but it is difficult to prove as IDL , for obvious reasons wants to hide this inventory.

    The abandoned “upland” lots you correctly reference are meaningless in the grand scheme of things , at 50 grand each , it takes 20 of them to equal 1 waterfront lot. There are 100 of them valued at 4.7 million. But , I do agree that
    EVEN some of these $1,800 per year , to lease, lots have been abandoned.

    Finally, do you think that IDL allows the property OWNER any say whatsoever in the selection of the appraiser ? NOT on your life. IDL chooses the appraiser – NOT the lessee. Since the IDL selects the appraiser and gives them the USPAP instructions HOW does the improvement owner magically get the value of his improvements jacked up ?? Quite the opposite is actually what happens again and again.

    Your last paragraph shows how close we actually are to being in agreement …… YES please take ALL of the 12 lots on the waterfront out of mothballs , and auction them off , the state has destroyed the former cabins , so there is nothing there. Prior to this recent December auction, The last time they did this there were no bids that hit their $1 million minimum…. So they cancelled the auction. Eventually, they came back and did a REAL auction , NO minimum , and that lot ultimately sold for about $500,000,
    I believe it was around $ 4,800 per FF.

    So, there we are , in agreement , the state wants out , the AUCTION is a fair method , but before you go off stealing value from some innocent guy who had nothing but the purest intentions , why not see what the “market” tells us about the value of the 12 ALREADY vacant lots ?

  10. Grumpy,

    Point of clarification.

    I believe the state may of helped facilitate but did not pay for improvements. The State did manage a community water system in Pilgrim Cove, but all monies paid by owners and lessees was held in a separate fund. This has long been abandoned, since most cabins have gone to wells.
    http://www.idl.idaho.gov/LandBoard/minutes/2008/may15_08finmin.pdf

    The sewer system was started by the homeowners around Payette Lake and the state help with initial funding which was all paid back via the users.

  11. Richard ,

    The curator does not seem to like my replies , but has not told me why …… Somehow doubt they will like this table either .

    These 13 lots are ALL. IDL Payette Waterfront lots and all were unleased at end of 2012 …..the final number is the IDL supplied 2013 appraisal value, so to calculate an annual lease value multiply by 4%. They all average out at over $1,000,000 per lot.

    Count Address # Street Name LEASE # Existing Lot # Prelim Subdivision (as appraised) 2013 assessed Value
    1 3580 Warren Wagon RD 5003 D Point of Rocks 1157870
    2 2140 Payette DR 5010 37 Pinecrest 1076650
    3 2238 Payette DR 5012 53 Cedar Knolls 1293750
    4 1047 Plymouth RD 5014 10 B1 Pilgrim Cove A 588010
    5 2016 Payette DR 5016 18 Pinecrest 1184790
    6 2152 Payette DR 5025 38 Pinecrest 1068670
    7 2043 HoneySuckle Way 5029 17 B1 Pilgrim Cove A 761380
    8 2210 Payette DR 5045 46 Pinecrest 1318340
    9 2107 Water Lily LN 5049 38 B1 Pilgrim Cove A 1127820
    10 2097 John Alden RD 5060 33 B1 Pilgrim Cove A 747340
    11 1952 Warren Wagon RD 5069 8 Pinecrest 1293270
    12 980 Syringa Way 5074 15 Pinecrest 780760
    13 2093 John Alden RD 5015 31 B1 Pilgrim Cove A 894830

    TOTAL 13293480

  12. Richard,

    Unfortunately , the curator does not want you to understand the facts of this matter. Please contact the Guardian for details.

    Ironic that as a “differentiated ” vehicle – they behave remarkably like the SR and Statesman…… i.e. FULLY CAPTURED .

    Peace

  13. Richard A Evensen
    Feb 12, 2014, 1:36 am

    Easterner: If I am the current lease holder, I already own the improvements. I would be offering you a premium for the lot you just purchased, or offering to sell you the improvements for a price you agree to.

    There may be harsh and angry feeling to start with, but it seems level heads could prevail. The key is that the State is out of the process, and gets to simply sell the lot for full market value.

  14. I am opposed to the IDL getting into businesses like the Affordable Storage Business and the Brew Pub in downtown Boise. It is wrong and puts private operators at a competitive disadvantage. Even the Gov. sees this as wrong.

  15. Richard A Evensen
    Feb 12, 2014, 5:15 pm

    Gonzales,

    It is a pleasure to exchange thoughts in civil discourse. Thank you.

  16. Again, I agree with you completely. It is wonderful to exchange ideas with other interested readers. Thank you very much.

    Also, I obviously jumped the gun on falsely accusing the Curator, of censoring my posts. Please understand my impatience, as my first entry was posted almost immediately. Whereas subsequent posts were delayed for multiple days, leading me to believe that for some reason my postings had been objectionable to someone. My apologies for this impatience.

    EDITOR NOTE– Myapologies for the delays. I am in Tahiti and the wifi is cumbersome. I also am unable to get several items posted, but will try to get them on the site soon.

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