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Just one lot draws competitive bid at Priest Lake state cabin-site auction

Sandy beach at Priest Lake cottage site that sold at auction over the weekend for more than $1 million (State of Idaho)
Sandy beach at Priest Lake cottage site that sold at auction over the weekend for more than $1 million (State of Idaho)

Here’s my full story from

By Betsy Z. Russell

A 1.7-acre slice of North Idaho lakefront heaven on Priest Lake – with just a rustic, one-bedroom cabin on it – drew the only contested bidding at a weekend auction in which the state of Idaho sold off 39 lakefront cabin sites.

The cabin owners, a Seattle couple who had been leasing the land from the state and whose family had had the cabin since at least the 1970s, were outbid by a Coeur d’Alene physician who was willing to pay $1.107 million for the lakefront property – $367,000 more than its appraised value. The successful bidder also will be required to pay the cabin owners the $44,200 assessed value for their 870-square-foot cabin.

All 38 other cabin sites sold for the appraised value to the current lessees, who own the cabins on the previously state-owned lots. It’s part of the Idaho Department of Lands’ move to get out of the business of renting lakefront cabin sites, on which private owners lease the ground and build and own their own cabins. It’s a business that’s led to multiple lawsuits over the years, as cabin owners contested rising rents for the ground, and the department cited the Idaho Constitution’s requirement that state endowment land be operated to raise revenue for schools – not to benefit lessees.

Two other lots drew no bids – the cabin owners had nominated them for the auction, but didn’t bid.

With the weekend auction at the Coeur d’Alene Resort, Idaho has now auctioned off 228 cabin sites – 141 of those at Priest Lake, and 87 at Payette Lake near McCall. The state endowment has collected $97.7 million in proceeds from the auctions – $18.9 million of that on Saturday.

Idaho’s state Land Board, which is chaired by Gov. Butch Otter and consists of the state’s top five elected officials, has voted to invest the money into higher-earning investments, focusing on timber land. The state endowment currently owns nearly 1 million acres of timber land, and made $68.2 million from logging in 2015.

The state also maintains a permanent endowment fund, which totals $1.87 billion; its earnings, like those from the land, go the endowment’s beneficiaries, the largest of which is Idaho’s K-12 public schools.

Idaho received grants of more than 3.65 million acres of land in trust from the federal government when it became a state. About 33 percent of that land has been sold off, most of it between 1900 and 1940; the money went to the permanent endowment fund. The state endowment now owns 2.44 million acres of land.

When endowment land is sold, the money goes initially to the state’s Land Bank fund, which holds it for five years. If it hasn’t been reinvested into other land by that point, it reverts to the permanent endowment fund.

The Land Board has authorized auctioning off nearly another 300 state-owned cabin sites at Priest and Payette lakes by 2019. It’s also considering auctioning off some unleased cabin sites at Priest Lake this fall.

At Saturday’s auction, the lot that drew the competitive bidding was the priciest lot, but also the one with the lowest-valued cabin on it. The priciest property in total was a $615,000 lot with a $1.2 million, 4,948-square-foot cabin; it went to the cabin owner for the appraised value. The lowest-valued lot in Saturday’s auction sold for its appraised price of $300,000.

Sharla Arledge, Department of Lands spokeswoman, said, “The auction went smoothly.” And even with the one lot that drew competitive bidding, “There was no apparent drama.”



State auctions 32 properties on Payette Lake, gains $13.47 million

sberg@IdahoStatesman.comJanuary 31, 2015

 — In 2010, Idaho's Land Board approved a plan to sell off most of the 500-plus cottage sites the state Department of Lands controls on Payette and Priest lakes. 

The goal of the Land Board, made up of the governor, state attorney general, superintendent of public instruction, secretary of state and state controller, was to put proceeds from the sale of the lake properties into investments that generate more revenue. 

The department has since sold127 of those properties, including 32 sold to the highest bidder Saturday in Boise, according to a Department of Lands news release. 

Saturday's land sales generated $13.47 million — an average of almost $421,000 per property. The money is to be used for the benefit of state endowment funds that support Idaho’s public school system, State Hospital South in Blackfoot, and teacher education programs at Idaho State University and Lewis-Clark State College.

Twenty-nine of the lots auctioned Saturday were leased and have cabins on them. The auction for leased lots was voluntary; people who leased the lots from the state, but own the cabins and other personal property on the land, nominated their lots for auction. All 29 of the current lessees won the auctions for their lots. The total sales price of those lands was $11,369,000, according to the Department of Lands. Each property's minimum allowed bid was the appraised value of the land. Twenty-eight of the auctions were not competitive. The remaining lot sold for $8,000 more than the land's appraised value, according to the department. 

Three unleased lots also were auctioned for $2,101,000 — $73,000 more than the appraised value of the estate, according to the news release. Three other unleased lots did not attract bids. 

The Land Board has approved the auction of another 180 leased lots at Priest Lake and Payette Lake before the end of 2017. 

When Idaho became a state in 1890, the federal government granted the state 3.6 million acres of endowment land to manage for the benefit of schools, hospitals and other recipients. The Idaho Constitution requires the Land Board to manage the lands for each beneficiary's "maximum long-term financial return." Some lands have been sold over the years, and today the state manages 2.4 million acres of endowment land.

The Constitution requires the department to hold a public auction when selling endowment lands.

Most of the money from earlier sales of Payette Lake and Priest Lake sites was recently transferred to the Department of Lands' permanent fund. The money in that account is never spent, department spokeswoman Emily Callihan said. Instead, 70 percent of its balance is invested in stocks, and the other 30 percent goes to fixed-income securities, such as bonds. 

Earnings from the permanent fund investments go into a different account, from which payouts are made to beneficiaries, Callihan said. The amount of those distributions is determined primarily by a formula based on the amount in the permanent fund. 

But the money from today's auction, as well as from other endowment land sales, will go into a third account, called a "land bank."The Department of Lands uses money from the land bank to buy other lands. Some of it might end up being used to buy additional forested lands for timber sales the Land Board manages, Callihan said.




To be eligible to apply

for auction

participation, a

leaseholder must:

1 - be a lessee in good

standing and not otherwise

indebted to the State of Idaho

2 - not be named in litigation

against the Land Board,

which may affect valuations

or lease terms

3 - not have a conflicted


4 - have either executive a

long term residential lease or

have applied to lease

pending completion of the

challenge appraisal process

(persons failing to execute a

lease upon final

establishment of appraised

value will lose eligibility)

5 - have completed the New

Drainfield Lot process, if

necessary, prior to

scheduling a pre-application

meeting in 2016 or 2017



 October 28, 2014,

Betsy Russel

Land Board sets more cabin-site auctions over the next three years

Idaho’s state Land Board has approved a plan to auction off at least 60 cabin sites at Priest and Payette lakes each year for the next three years. That’s beyond an already-scheduled auction set at Payette Lake for January for 36 cabin sites, six of them vacant. In August, the state auctioned off 59 lots at Priest Lake, with nearly all of them selling for appraised value to the people who had long leased the lots and built cabins on them.

The state endowment has been trying to gradually move out of the business of renting lots on which people build cabins or homes; the practice has led to years of legal fights over appropriate rents for the ground under the lakefront lots. Idaho’s Land Board is required by the state Constitution to manage the endowment lands for maximum long-term returns to the endowment.

The lots selected for each year’s auctions would be randomly selected from among those eligible, state Lands Department real estate services bureau chief Kate Langford told the board. Denny Christenson, president of the Priest Lake State Lessees Association, said the plan doesn’t give lessees any certainty as to whether or when they’ll be eligible to participate in an auction; he called for instead auctioning 80 Priest Lake lots each year for the next three years. That would bring the most money to the public school endowment the soonest, Christenson said. State Lands Department Director Tom Schultz said the Land Board could add additional lots in subsequent years if it chose. “We are trying to bring you a package we can deliver on,” he said. The board agreed to look into a way to schedule all eligible leased lots for future auctions so lessees know what’s coming.

Christenson also told the board that his term as president of the lessees’ association is nearly up, and the new president will be former Congressman George Nethercutt, R-Wash.


Priest Lake cabin owners buy lake property they had leased

 The Spokesman-Review
Jesse Tinsley photoBuy this photo

Judy Nail, left, Ryan Nail and Nancy Bettesworth hug Thursday after Ryan entered the winning bid for the Priest Lake cabin that has been in their family for 50 years.

State take

Thursday’s auction generated $26.9 million for Idaho’s public school endowment.

Nearly all of the 60 cabin owners whose Priest Lake cabin sites were auctioned by the state of Idaho on Thursday were able to purchase the properties at the appraised value, with no competitive bidding.

For most, the auction provided relief after years of controversy about the appropriate rent the state would charge cabin owners. While the land under their cabins was owned by the state, they built and owned their cabins.

There were tears of joy and high-fives from relieved cabin owners. There also was some continuing anger from those who resented the long process they’ve endured dealing with the state over their family cabin sites, and disputed the values the state set for the ground, which served as the minimum bidding price. That ranged from $200,000 to $665,000, for the land only.

The take for Idaho’s public school endowment on Thursday: $26.9 million.

Idaho long has rented the lakefront lots to people who build and own cabins on them, but the state has struggled to charge the constitutionally required market-rate rents. It has sharply upped the rents in recent years, pricing out some longtime cabin owners. The auction is part of the state’s attempt to get out of the cabin-site renting business. Just two of the sites drew competitive bidding; on one of those, the current lessee didn’t bid and the competition was between two prospective new owners. The state made more than $123,000 above the appraised value as a result. The other one that saw multiple bids came when a competitor bid up the price but the current lessee outbid him; that one went $9,000 over the appraisal.

All but two of the other cabin sites sold to the current lessees; in one exception, the current lessees had arranged to sell their cabin to a buyer who bid in their place. The other site drew no bids and went unsold.

Billy Symmes accompanied his beaming mother out of the contract-signing room after finalizing the purchase of the ground under their family cabin, which they’ve had since 1994. “Getting to hold onto the cabin is great – the process, no comment,” he said.

Denny Christenson, president of the Priest Lake State Lessees Association, said the process has been “confusing and frustrating” for cabin owners. At the end of the process, however, he was relieved to have ownership of the ground under his longtime family cabin.

“It feels good. It’s going to be a while to sink in,” said Christenson, moments after signing contracts to take ownership of the property. “Twenty-three years as a lessee and having a landlord – now we don’t have a landlord.”

He added with a chuckle. “Now, we have a mortgage.”

The process has moved in fits and starts. All of the cabin sites auctioned Thursday were included in earlier land exchanges, but the state Land Board abruptly canceled all exchanges last December.

“It totally changed course at the end of last year, so there was lots of concern that the state would not follow through with the auction,” Christenson said.

The 60 sites were divided into four groups, with a group auctioned every two hours at the Coeur d’Alene Resort. Christenson waited through much of the day before his cabin lot came up for auction in the 5 p.m. batch.

After each batch of auctions, cabin owners exchanged hugs and slaps on the back. “I know my gut’s been churning, and I’m not even in this round,” one said. “Taxes will be cheaper than the lease,” said another.

Steven Hubbs, 68, successfully bid the appraised value, $200,000, for the ground under the lake cabin he’s had for the past 15 years.

“It seems fair,” he said. “I think a lot of the older people that have owned cabins on the lake for a long time, I think they’re at a disadvantage – I don’t think they’re being treated fairly. But for people who bought recently, I think it’s fair.”

Don Morris of Chewelah came to watch the auction out of curiosity; his Priest Lake cabin is on a deeded site that he owns, so he’s not affected, but he used to own one on a state lease. He was among a crowd of more than 250 at Thursday’s auction.

“I’ve been on the lake since I was 15 years old,” Morris said. He said he was “a little surprised” that there wasn’t more competitive bidding. “I kind of thought there might be more investors come in and try to snag some of these properties,” he said. The real estate company handling the auction, Corbett Bottles, “certainly did a good job” advertising it, Morris said.

When he bought his first cabin on state-leased land in 1972, it had a 99-year lease and the rent was $100 a year. That soon changed; the lease term dropped to 10 years, and the rent started going up. “I could just see that the price was going to get too much,” Morris said, so when he had a chance to buy a cabin on land he could own outright instead, he did it.

Asked if it was worth the drive to watch the auction Thursday, Morris said, “As soon as it’s done, I’m going to the lake.”



Idaho Moves Forward with Priest Lake Cottage Site Sales

August 17, 2014 1:00 am  •  

OAKESDALE • It was always the same for Bonnie Dubinin, that exquisite feeling she got when the lake first came into view.

She’d see it there, that long stretch of blue surrounded by green trees, and think of the days to come. There would be swimming and fishing and berry picking, and quiet nights telling ghost stories while the campfire burned low.

Her family began visiting Priest Lake nearly a century ago, driving the dusty roads from their farm near Oakesdale up to Coolin, at the southern end of the lake. From there they’d take a boat out to the cabin their grandfather built near Eightmile Island.

He leased the property from the state of Idaho in 1928. It’s one of 354 Priest Lake “cottage sites” that generate revenue for public schools and other state endowment beneficiaries.

Dubinin, now of Lewiston, has been going there her whole life. Over the past couple years, it’s become an increasingly sentimental journey. The way lease rates are rising, she and her extended family aren’t sure how much longer they’ll be able to keep the cabin. The prospect of losing it was a distant possibility at first, but now it’s something they measure in terms of weeks. Barring a miracle, it will happen before the end of this year.

“I said my goodbyes when I left last year, but we managed to hold on a while longer,” Dubinin said. “I’ll go up this weekend and say goodbye again.”

Walking Away

By some estimates, upward of 120 Priest Lake lessees could join the exodus, walking away from sites that have been in their families for generations.

If they do, they’ll be required to remove any improvements they made — including cabins, boathouses and docks — while leaving behind the wells, septic systems and roads they installed at their own expense and often at the state’s request.

Many feel they have no other choice. The average annual lease payment at Priest Lake has increased 154 percent since 2010. It’s set to jump from about $10,000 this year to nearly $18,000 in 2015. For Dubinin’s family, the fee will exceed $24,000 — more than they can afford, even with six siblings sharing the load.

If the market for cabins were more robust, lessees would at least have the option of selling their improvements. However, uncertainty over the lease terms and over the state’s future plans has scared away many potential buyers.

The situation leaves a bitter aftertaste to what Dubinin sees as one of the blessings of her life.

“For 86 years, we had a cooperative, long-term relationship with the state,” she said. “We cleared the land, installed roads, put in septic systems. The state would mark trees and we’d remove them. We did everything we could to maintain and preserve the land. We trusted the state to work with us — but now that they feel like they can make some money, they’re saying ‘you’re out of here.’ It’s not right. Morally and ethically, this is not OK.”

Mandated to Maximize Revenue

This sense of broken trust stems, to some extent, from the State Land Board’s financial obligations.

The board — comprised of the governor, attorney general, secretary of state, state controller and superintendent of public instruction — is charged with overseeing Idaho’s 2.4 million acres of trust lands. It has a constitutional mandate to maximize long-term revenues for the endowment beneficiaries, yet critics suggest it has fallen short of that goal with respect to the cottage sites.

The lakeside lots were initially leased for as little as $10 per year. Rents stayed relatively low and affordable for decades, with no annual increase at all from 1947 to 1961.

The Land Board changed its approach in 1988, setting the annual fee at 2.5 percent of the lot’s appraised market value (not including improvements). However, the increase was phased in over 10 years to prevent any big spikes in rent.

Lessees also benefited from legislation approved in 1990, which shielded them from conflict auctions. That meant they didn’t have to bid against other interested parties when their leases expired every 10 years.

This implied “right of continuation” encouraged many lessees to begin building more expensive homes and improvements. It allowed them to earn substantial premiums as well. As the demand for lake properties improved, they could sell their cabins for much more than appraised value because the new owners didn’t have to worry about losing the lease to a higher bidder.

In 2010, the Land Board noted these “premium rents” amounted to $25 million since 2003, compared to $2.7 million for the state — meaning lessees garnered most of the profit as cottage sites changed hands, rather than the endowment beneficiaries.

State Looks to Get Out of Lease Business

That’s when the pendulum began to swing the other way.

The board agreed to bump annual lease fees to 4 percent, in an effort to generate more revenue. It also decided to sell the lake properties and get out of the cabin-site leasing business altogether, saying it could invest the proceeds in other land assets and earn a higher return.

Most importantly, the Idaho Supreme Court determined that the 1990 legislation was unconstitutional.

“That was a game-changer,” said Tom Schultz, director of the Idaho Department of Lands, which manages the endowment lands under the direction of the Land Board.

The 2012 ruling eliminated the right of continuation and exposed lessees to competition when their leases expired. By most accounts, this devastated the market for cabins. Since buyers could no longer depend on retaining the lease beyond its current term, they were unwilling to pay even appraised value for the improvements, much less offer a


At the same time, the state ordered new appraisals in preparation for selling the cabin sites. They increased market values for Priest Lake lots by an average of 80 percent, driving up the 2015 lease rates.

To date, Schultz said about 100 Priest Lake lessees have agreed to extend their leases for an additional five to 10 years. Another 62 will participate in an Aug. 28 auction at the Coeur d’Alene Resort, hoping to buy their lots from the state.

That leaves about 190 who are still trying to decide what to do.

Consistent Financial Return

Having trusted the state in the past, Dubinin and her family are reluctant to do so again.

They note that the Land Board has switched course before — first refusing to sell the lots, then agreeing to sell after values soared. Most recently, the board abruptly canceled plans last year to exchange 69 lots worth about $25.5 million for similarly valued commercial properties in Idaho Falls and Nampa.

The lessees “haven’t been able to count on anything,” said Dubinin’s sister, Cotton Crider, who lives on a farm outside of Oakesdale. “They keep changing the rules so it feels like we have to walk away.”

State Rep. John Vander Woude of Nampa, a frequent critic of the Land Board, said lessees are justified in feeling betrayed.

“They do have some legitimate concerns that they’ve been led down several different paths,” he said. “The whole philosophy of where we go with the cabin sites has changed considerably.”

Perhaps the most misleading sentiment is that selling the lake lots is primarily a financial decision.

If maximizing the return for beneficiaries is the state’s primary goal, Vander Woude said, these recreational properties out-perform most other trust land categories.

“They’ve provided one of the more consistent returns of all the endowment assets,” he said.

For example, the state collected more than $5.5 million from 507 cottage site leases last year, with minimal expense or overhead. Its 1.4 million acres of rangeland, by contrast, earned less than $700,000 in net revenue.

“If you look at all the endowment assets, the cabin sites aren’t the ones we should be dumping first,” Vander Woude said. “There’s a lot of other land we should be more concerned about.”

The more likely motivation for selling the lots, he said, is politics.

“Politically, the cabin sites are a pain in the neck,” Vander Woude said.

One way out of the dilemma is to sell the lots — as Gov. C.L. (Butch) Otter essentially acknowledged when the Land Board unanimously agreed to move forward with the plan.

“I’m willing to do anything to divest ourselves of these headaches,” he said in 2010




Idaho Department of Lands Auction of Cottage Sites

 *LIVE PUBLIC AUCTION* Corbett Bottles will be auctioning 61 Priest Lake area cottage sites for the Idaho Department of Lands on August 28th, 2014beginning at 1:00 PM PST.  Auction will be held at the Coeur D’Alene Resort, in Coeur D’Alene, ID.  All auction property is waterfront, and a comprehensive list is below organized by neighborhood.  The bid price at auction will be for the LOT ONLY.  The cost of the improvements, as well as an appraisal fee, an administration fee, and a title insurance deposit will be due from the high bidder on auction day.  All bidders wishing to bid on property that are not the current owner of the improvement on that property must present a cashier’s check in the amount of $50,000 to bid.  At close of auction, the cashier’s check, as well as an available funds check for the remainder of the improvements and applicable fees will be due from the high bidder on auction day.  These costs which will be added to high bid price are clearly identified in the listing for each property below, as well as the Legal Notice from the Idaho Department of Lands posted for each site under Terms and Conditions.  All lots must meet or exceed the posted reserve price to sell.  The reserve price for the lots is clearly posted next to each lot.  Buyer to conduct all due diligence prior to auction.  Property being sold “AS-IS”, no contingencies.  Please contact Corbett Bottles for further information.

Outlet Bay Neighborhood - Click here to see properties

  • 1 Southshore Outlet - Lot 1 Blk 1
  • 2 Southshore Outlet – Lot 2 Blk 1
  • 3 Southshore Outlet – Lot 3 Blk 1
  • 8 Southshore Outlet – Lot 8 Blk 1
  • 9 Southshore Outlet – Lot 9 Blk 1
  • 10 Southshore Outlet – Lot 10 Blk 1
  • 11 Southshore Outlet – Lot 11 Blk 1

Soldier Creek Neighborhood - Click here to see properties

  • 434 N Steamboat Bay Rd – Lot 10 Blk 1
  • 628 N Steamboat Bay Rd - Lot 2 Blk 1
  • 630 N Steamboat Bay Rd - Lot 1 Blk 1

Hess Point Neighborhood - Click here to see properties

  • 62 Hess Point Rd - Lot 16 Blk 1
  • 82 Hess Point Rd - Lot 15 Blk 1
  • 98 Hess Point Rd - Lot 14 Blk 1
  • 184 N Hess Point Rd - Lot 6 Blk 1

Clambake Neighborhood - Click here to see properties

  • 59 S Clambake Rd - Lot 13 Blk 1

Tanglewood Point Neighborhood - Click here to see properties

  • 644 Clambake Rd - Lot 8 Blk 1
  • 678 Clambake Rd - Lot 9 Blk 1
  • 722 Clambake Rd - Lot 10 Blk 1
  • 1208 Rocky Point Rd - Lot 19 Blk 1
  • 1228 Rocky Point Rd - Lot 20 Blk 1
  • 1316 Rocky Point Rd - Lot 22 Blk 1

Leisure Bay Neighborhood - Click here to see properties

  • 464 Arnold Drive - Lot 1 Blk 1
  • 77 W Cavanaugh Bay Rd - Lot 3 Blk 1
  • 63 W Cavanaugh Bay Rd - Lot 4 Blk 1
  • 3940 Cavanaugh Bay Rd - Lot 6 Blk 1

Cougar Creek Neighborhood - Click here to see properties

  • 178 E Cavanaugh Bay Rd – Lot 13 Blk 1
  • 224 E Cavanaugh Bay Rd - Lot 11 Blk 1
  • 394 E Cavanaugh Bay Rd - Lot 6 Blk 1

Hunt Creek Neighborhood - Click here to see properties

  • 164 S Hunt Creek Rd - Lot 60 Blk 1
  • 241 N Hunt Creek Rd - Lot 55 Blk 1
  • 136 N Hunt Creek Rd - Lot 46 Blk 1
  • 4342 Eastshore Rd - Lot 42 Blk 1
  • 4410 Eastshore Rd - Lot 41 Blk 1
  • 4706 Eastshore Rd - Lot 29 Blk 1
  • 182 Cutthroat Rd - Lot 23 Blk 1
  • 174 Bull Trout Rd - Lot 22 Blk 1

Horton Creek Neighborhood - Click here to see properties

  • 345 Eight Mile Rd - Lot 42 Blk 1
  • 78 W Horton Creek Rd - Lot 24 Blk 1
  • 304 N Horton Creek Rd - Lot 11 Blk 1

Pinto Point Neighborhood - Click here to see properties

  • 375 Pinto Point Rd - Lot 28 Blk 1
  • 414 Pinto Point Rd - Lot 10 Blk 1
  • 346 Pinto Point Rd - Lot 7 Blk 1
  • 332 Pinto Point Rd - Lot 6 Blk 1

Woody’s Point Neighborhood - Click here to see properties

  • 1202 Cape Horn Rd - Lot 47 Blk 1
  • 62 Coho Ln - Lot 31 Blk 1
  • 40 Char Ln - Lot 26 Blk 1
  • 38 Char Ln - Lot 25 Blk 1
  • 52 Woody’s Point Rd - Lot 20 Blk 1
  • 32 Woody’s Point Rd - Lot 19 Blk 1
  • 1934 Cape Horn Rd - Lot 17 Blk 1
  • 40 Powerline Rd - Lot 14 Blk 1
  • 170 Powerline Rd - Lot 9 Blk 1
  • 350 Powerline Rd - Lot 4 Blk 1

Powerline Neighborhood - Click here to see properties

  • 3476 Cape Horn Rd - Lot 1 Blk 4
  • 44 Janet Ln - Lot 7 Blk 3
  • 2993 Cape Horn Rd - Lot 4 Blk 2

Desmet Park Neighborhood - Click here to see properties

  • 197 N Diamond Park Rd - Lot 1 Blk 1

Two Mouth Creek Neighborhood - Click here to see properties

  • 308 State Cabin Rd - Lot 8 Blk 1
  • 392 State Cabin Rd - Lot 6 Blk 1
  • 416 State Cabin Rd - Lot 5 Blk 1
  • 446 State Cabin Rd - Lot 4 Blk 1
July 12, 2014 in Opinion

Kaari Burrows Davies: Inflated rent appraisals hurt Priest Lake

Kaari Burrows Davies

There is a lot of disinformation about the current conflict between the Idaho Land Board and dozens of cottage site lessees at Priest Lake. Most of that disinformation is coming out of Boise. The state of Idaho cannot defend their recent appraisals, which are riddled with errors and will increase rents on the lake by 50 percent to 126 percent in one year’s time. Instead, the state’s lead attorney says that rents were too low – in the 1950s and 1960s – as justification for the massive rent increases in 2015. Really?

For over 80 years, Idaho’s Land Board has been setting the terms and rental rates for lessees at Priest Lake. If they are unhappy with what they charged 50 years ago, they should be blaming themselves, not artificially inflating the appraised values for 354 lots at Priest Lake today. Fact is, the state is proposing rent increases from this year’s average rent of $11,000 per year to $18,000 per year to rent land (not cabins). Some folks will be asked to pay upwards of $25,000 a year to rent.

To be clear, Priest Lake is not Payette Lake. Most of us are still on septic systems and draw our drinking water out of the lake with 150-foot hoses. We do not have a major airport, ski resorts, hospitals or K-12 schools within 60 minutes of our lots. Most of the lots are summer use only.

The state estimates 10 percent to 30 percent of lessees will have to abandon their lots based on the new rents. Tom Schultz, director of Idaho Department of Lands, stated recently that the state can absorb 47 percent vacancies and still make money. To follow his logic, why not raise the rents 1,000 percent above fair market value and live off of the 10 percent of lessees who can afford to stay on the lake?

The lessees are the only folks calling attention to the approaching train wreck that the government planners in Boise are creating at Priest Lake. The idea that the state is willing to accept 47 percent abandonments later this year is irresponsible and reckless. Among questions that Schultz and the Land Board are not willing to answer: Why are the state’s new appraisals, completed by a Montana appraiser, 30 percent to 40 percent higher than appraised values established by two experienced and highly respected North Idaho appraisers for the exact same lots?

Idaho’s Endowment Trust counts on consistent annual rent to support school funding. How can 166 abandoned lots – generating zero income – be in the best interest of Idaho’s schoolchildren? Where will the state go to make up for millions in lost consumer spending and jobs that are created by these same lessees? Current lessees remain in this legal fight against the state of Idaho because, as a group, we have millions of dollars’ worth of assets (cabins) built as a requirement of leasing that will be stranded. Because of the inflated rents, lessees have found they can’t sell their improvements (cabins). As of this writing, 28 cabins on state-leased lots are for sale at greatly reduced prices.

If dozens of lessees leave the lake later this year, there will not be an influx of new renters standing in line to take our place.  If the bulldozers continue to demolish homes, no one will be clamoring to take over expensive leases and build new cabins that they too will have to destroy at the end of their lease. Lessees are asking for fair-market values and a fair appeal process. It’s time for the state of Idaho to maximize the long-term income for the Endowment Trust by creating a reasonable plan that maintains a stable funding source for Idaho’s schools and the North Idaho economy.

Kaari Burrows Davies is a native of Idaho. Her family members have been lessees on both federal and state land at Priest Lake for over 90 years.



Judge declines to block Priest Lake appraisals

Posted: Saturday, June 28, 2014 10:00 am

SANDPOINT — A 1st District judge declined Friday to grant a preliminary injunction to stop the state from using the latest round of appraisals to set cottage site lease payments at Priest Lake.

A group of more than 70 cottage site lessees sued to state in April to bar it from using appraisals developed by Hall-Widdoss & Co. The Idaho Department of Lands board sought to use the appraisals to set lease payments, minimum bids and establish the value of lessees’ improvements to the cottage sites.

Lessees sue Department of Lands over Priest Lake property appraisals

Lessees along Priest Lake are seeking an injunction to protect them against the latest Department of Land appraisals for land and cottage sites.Lessees along Priest Lake are seeking an injunction to protect them against the latest Department of Land appraisals for land and cottage sites.

The Idaho Department of Lands (IDL) is facing a lawsuit from several individuals who lease cottage sites from the agency along Priest Lake. According to documents filed in Idaho’s 1st District Court in Bonner County, 76 plaintiffs are taking issue with IDL’s recent appraised values of the properties, and the methodology used by a Missoula, Mont., appraisal firm, Hall-Widdos, that was paid by the IDL to conduct the appraisals in question.

“These clients have been injured by inappropriate and unrealistic appraisals that are noncompliant with professional standards,” said David Leroy, former Idaho lieutenant governor and attorney general. Leroy is one of the attorneys representing the plaintiffs who are suing IDL. He told that “this appraisal process has produced inconsistent results and excessively high values that are well over reasonable market rates.”

The IDL was established in the Idaho Constitution to manage the state’s original endowment lands. Governed by a board of directors that consists of five of Idaho’s statewide constitutional officers (the governor, attorney general, secretary of state, state superintendent of public instruction and state controller), the current board members overseeing the IDL have stipulated that the Idaho Constitution requires them to manage the public lands that were granted to Idaho at the time of statehood “in such manner as will secure the maximum long term financial return to the institution to which granted.”

Leroy, who served on IDL’s board during his tenure as state attorney general, said that he is well versed in the duties of both the agency and its board but noted flaws in the ways that those duties are being executed. “The Land Board has the authority to set lease rates, they have the authority to use appraisals to determine market values and they have a mandate to maximize their income,” he stated.

However, Leroy also said that the IDL board is trying to use elevated property appraisal rates to set minimum bid values for when the IDL decides to sell the properties through an auction process. “Three times over the last two calendar years, the IDL has commissioned various appraisers at the Priest Lake properties,” he stated.

Idaho’s current attorney general, Lawrence Wasden, is fulfilling multiple roles amid the IDL’s legal troubles. By constitutional definition, Idaho’s attorney general is not only a voting member of the IDL board, but also serves as legal counsel to the agency, all the while serving as the state’s top law enforcement and prosecutorial agent.

When reached for comment about the lawsuit against the IDL, Wasden spokesperson Todd Dvorak told that “since the challenge to the appraisals is a matter in litigation, I can’t comment on the issue.”

Kaari Burrows Davies, one of the plaintiffs in the lawsuit who is also serving as a spokesperson for the other plaintiffs, told that “we are seeking an injunction from this appraisal. In the last three years, our lease rates have increased an average of 154 percent.”

Burrows Davies added that, while many of the lessees of the Priest Lake cottage sites have spent their own private money making upgrades to the properties, the IDL’s most recent appraisals of the properties have attributed the added value of the upgrades directly to the IDL, the owner of the cottage sites, a point that she believes is troublesome. “If we are not successful in getting an injunction, I think you’ll see a lot of people having to abandon their lots at the end of this year,” she stated.

Burrows Davies also told of her concerns that the IDL utilized the services of a Montana-based appraisal firm, rather than an Idaho firm, to appraise the Priest Lake cottage sites. Noting that Tom Schultz, director of the IDL, has professional ties to the state of Montana, she questioned if the IDL had conducted an open bidding process before selecting the Hall-Widdos firm and suggested that Schultz may have ties to the firm itself.

Yet in a court document filed on behalf of the IDL defending against the lawsuit, Wasden and his staff state that “the Hall Widdows appraisals were requested by the lessees in response to appraisals completed in 2012, and approved by the Land Board in 2013.The 2012-13 appraisals, conducted by four appraisers working independently, were, on average, more than 80 percent higher than past appraisals.”

The document says that while the IDL was not obligated to conduct reappraisals, the Land Board nonetheless agreed to do so, and that’s when the Montana firm was chosen to appraise the Priest Lake properties.

Emily Callihan, spokesperson for the IDL, told Idaho Reporter.Com that while Schultz did indeed previously work for the state of Montana, he nonetheless “had never met, worked with, or had any knowledge of Steve Hall or his appraisal firm before they were hired by IDL to do appraisal work at Priest Lake.” contacted the offices of all the IDL board members—Gov. Butch Otter, Secretary of State Ben Ysursa, Superintendent of Public Instruction Tom Luna, Controller Brandon Woolf and Wasden—asking for details of what the board had approved in terms of the IDL’s selection of appraisers. Only Wasden’s office replied, with spokesperson Dvorak noting that “this seems like a question best suited for answering by the IDL.”

The plaintiffs and the IDL are due back in court on Tuesday, June 24, at the Bonner County Courthouse.

June 21, 2014 in Idaho

Priest Lake cabin owners file suit over state’s appraisal of leased land

Steep hike

The average rent at Priest Lake in 2015 would increase from the current $9,915 a year to $17,850 under the new appraisals, according to court filings.

Seventy-six cabin owners on Priest Lake who rent the land under their cabins from the state of Idaho have filed a lawsuit charging that the state is claiming ownership of improvements such as access roads and utility lines that the renters installed with their own money.

As a result, the latest appraisals for the state-owned cabin sites have ballooned as much as 80 percent, pushing the value beyond the means of many lessees. Those appraisals will be used as minimum bids for possible public auctions and as the basis for future rents.

“The appraisals are objectively wrong,” the cabin owners argue in court documents. They seek to stop the state from using the new appraised values and return to this year’s values plus a 1.6 percent inflationary increase.

The state says that would mean a loss to an endowment that benefits public schools of nearly $2 million next year.

Idaho has scheduled an auction Aug. 28 for 62 of the 354 state-owned cabin sites at Priest Lake. Those lessees signed up for the auction, willing to take a chance at being outbid to get ownership of the ground under their cabins. The group suing includes a half-dozen who are signed up for the auction.

Cabin owners who are outbid at auction would receive the current appraised value for their cabin site, plus other improvements.

“The valuations are really indefensible,” said Kaari Burrows Davies, a Kellogg native and Spokane resident whose father, with his father, built a cabin on a Priest Lake state lot in 1959.

When Idaho first started leasing the lots a century ago, the land was undeveloped, with forest stretching to the water. Cabin-site renters brought in their building materials by boat and arranged on their own to bring in roads and utilities.

The cabin owners, whose attorneys include former Idaho state redistricting commissioner Ray Givens and former Idaho Lt. Gov. David Leroy, say the state is violating their constitutional rights and illegally taking the value of the roads and utilities without compensation. They’ve also listed several other concerns about how the appraisals were set.

In response to protests from lessees over the soaring values, the state set up an appeal process for the appraisals. But all phases of that include the same instruction to appraisers: To value the lots as if they have roads and utilities leading to them.

In a court filing, Givens said the average rent at Priest Lake in 2015 would rise from the current $9,915 a year to $17,850 under the new appraisals.

Idaho Secretary of State Ben Ysursa, who’s worked on the cabin site issue for years as a member of the state Land Board, said, “It’s always been the big question: Just what is the value of these things? We’ve always fought about it.”

He doesn’t dispute that many renters developed the land where their cabins sit.

But the state argued in court documents this week that renters have no property rights that can be violated when it comes to the land under their cabins.

Judge Barbara Buchanan in Bonner County has scheduled a hearing next week on the request for an injunction.


Auction of Idaho Cabin Sites on Priest Lake Set for Aug. 28 in CDA

POSTED BY  ON SAT, MAY 24, 2014 AT 11:00 AM

Following the April 5 Idaho Department of Lands auction of 21 cabin sites along Payette Lake, which netted the state $6 million, a similar auction has been set for a number of Priest Lake cottage sites on Thursday, Aug. 28.

Idaho News Service correspondent Dave Goins, writing for this morning's Coeur d'Alene Press,reports that there are 354 cottage site leases on state-owned land along Priest Lake, but the number of sites to be auctioned in August won't be known until the end of July. A representative from the Priest Lake State Lessee's Association has recommended that 72 sites be made available.

The Aug. 28 auction will take place at the Coeur d'Alene Resort.

Proceeds from the April auction of Payette Lake cabin sites funneled $4.5 million to the Idaho Department of Education, Idaho State University and Lewis-Clark State College, while another $1.5 million will go to State Hospital South in Blackfoot, which provides acute and long-term care for the severely mentally ill.


Twenty of 21 Payette Lake lots sell to current state leaseholders



dpopkey@idahostatesman.comApril 8, 2014 


The Idaho Land Board's gradual sale of about 500 lots at Payette and Priest Lakes worth about $200 million took another step Saturday with the "voluntary auction" of 21 vacation home sites at Payette Lake. All but one of the 21 sites was purchased by the incumbent leaseholder, repeating the pattern of earlier sales.

The sale raised $6.1 million for endowments benefiting education and for State Hospital South. Three of the 21 lots had competitive bids, bringing in $33,200 above appraised value, while 18 sold at the appraised value. Six lots were on the lakefront, 15 were upland sites.

About 150 people attended the auction in Eagle, according to an Idaho Department of Lands news release. So far, the board has auctioned lots only when the leaseholders volunteer for an auction and risk competitive bidding.

The one lot not bought by a current leaseholder is at 991 Rocky Shore Drive in McCall. Appraised at $37,000, it sold for $42,000. The buyer will have to pay $68,580 to the former leaseholder for the value a home and other improvements.

After years of struggling to balance the constitutional obligation to manage endowment lands to receive maximum long-term return with political pressure against raising rents, the Land Board voted in 2010 to gradually divest the state’s interest. Lots were to be sold or traded in a “market savvy” process.

Another voluntary auction for 74 lots at Priest Lake is expected later this year.

On Oct. 18, 10 lots were auctioned at Payette Lake, after lessees voluntarily applied. Incumbent lessees won all 10 auctions, also held in Eagle, bidding a total of $3.16 million. Nine of the lots sold for the minimum bid of appraised value. The tenth was appraised at $36,000 and sold for $47,860.

Three undeveloped lots also were auctioned. One sold for $1.1 million, 3 percent above appraised value; one for $1 million, 51 percent above appraised value; and one for $620,000, 6 percent above appraised value.

Saturday's Payette auction and the forthcoming Priest auction was made up of lessees who were parties to cancelled land swaps that would have given them title to their lands. In October, the board cancelled the exchanges because of legal concerns.

One proposed trading cottage sites at both lakes for three commercial buildings in Idaho Falls, which the state said would double annual income to more than $2 million and an estimated 9.6 percent cash return. A second would have swapped 11 Payette sites for a Nampa office building.

After months of work by state employees and private parties, the Land Board rejected the exchanges after opposition from legislators concerned about the state competing in commercial real estate. County officials also complained about eroding property tax bases by converting private property to tax-exempt state property. Opponents also said the trades didn’t meet state law requiring exchanges be made for “similar lands of equal value, public or private.”

The board expressed regret for raising expectations, but Gov. Butch Otter said the “similar lands” provision left little room for maneuvering. Another pending exchange was canceled.

The "similar lands" impediment was removed by the 2014 Legislature, when it passed SB 1277 with just two dissenting votes.



 Land Board Accepts new Appriasals for State Leases

In a special meeting today, Idaho’s state Land Board, which consists of the five top elected state officials and is chaired by Gov. Butch Otter, voted to accept new values for state-owned cabin sites at Priest and Payette lakes on which renters have built and own their own cabins. New appraisals were done on 361 Priest Lake cabin sites and 16 at Payette Lake.

“As we’re all painfully aware, the 2013 valuations came in 84.9 percent higher than IDL’s 2012 valuations,” Denny Christenson, president of the Priest Lake State Lessees Association, told the board. “Lessees were astounded to see their values increase by that much during a time when their other real estate investments were declining in value.” But the new appraisals, he said, are 79 percent higher than the 2012 appraisals. That’s left lessees, he said, “with the same question they asked last year – how can these values be 79 percent higher than 2012 in a down market?”

The 2014 values vary considerably, and Christenson said the appraisers’ qualifications were much better this time around. Still, he said, “A large number of lessees continue to believe the appraised values are much too high and would not be supported on the open market.” Many will appeal, he said.

The values matter because they’re the basis for calculating rent on the land, and also are a starting point for auctions or other transactions in which cabin owners – or others – could have the opportunity to buy the land under the cabins from the state. The state has been working for several years to get out of the cabin-site renting business, in favor of other land investments that bring greater earnings to the beneficiaries of Idaho’s state endowment, the largest of which is the state’s public schools.

Lands official Patrick Hodges said based on the results of a meeting between the department and the Priest Lake lessees, “We’ve opened a two-week window after the appraisal numbers are approved by this board, to allow lessees to submit factual corrections.” That will be for errors in measurements and the like, he said, and such corrections will be made without having to go through a full appeal process.

December 5, 2013 in Idaho

Two Priest Lake cabin owners lose state leases

 The Spokesman-Review
Two Priest Lake cabin owners were outbid for their leases on the state land under their Idaho cabins on Thursday - including one who has at least five ancestors’ remains buried on the site.

The family is hoping to overturn the results of the auction through its pending lawsuit, and their Spokane attorney said he was surprised the state went ahead with the auction; state lands officials said there was nothing legally to stop it.

“Because there was no injunction filed, there was nothing that would preclude it moving forward,” said Idaho Department of Lands spokeswoman Emily Callihan. “We have a legal obligation to put expiring cottage site leases up for advertisement. If somebody other than the current lessee emerges who’s interested in acquiring that, we have to hold the auction.”

Spokane attorney J. Scott Miller said, “The litigation is still pending.” He’s waiting for a ruling from a North Idaho judge on his motion to “declare that the auction process itself was flawed and it was an invalid auction. So what the state has done is they’ve gone ahead and had the auction regardless.”

Jan Nunamaker bid $1,000 to keep her family’s longstanding lease, but was outbid by Denver attorney Peter Mounsey, who bid $2,000. But Miller said by participating in the auction, the family preserved its legal rights.

“The law requires that you participate in the bidding in order to have any claim that survives the auction process,” he said. “And so they participated in the bidding.”

With the auction done, Mounsey takes possession of the cabin on Jan. 1; he was required to pay Nunamaker the appraised value of the improvements at the close of the auction, which came to $38,500. He also had to pay the first year’s rent for the ground, $22,880, to the state in advance.

Nunamaker’s grandfather, John Morton Starlin, hand-built the cabin out of salvaged materials in 1933 that he brought in 10 miles by rowboat; the cabin site has no road access. Starlin’s descendants have been gathering at the modest cabin, and another small A-frame one they own next door, also on leased state land, for decades.

The ashes of five family members are located on the auctioned cabin site, along with permanent memorials to all five.

“The history on that cabin is really kind of remarkable,” Miller said. He said of the state Department of Lands, “They’ve made a series of very unusual decisions up at Priest Lake, and this is another of them.”

Nunamaker was among those signed up for a land exchange to allow her family to get ownership of the land under their cabin, but last month, the state canceled it and all future land exchanges due to new legal questions. The state Land Board has an adopted strategy of getting out of the cabin-site business, in which people build and own their cabins on rented state land. But with land exchanges off the table, that process has been slowed.

The state land is part of the state’s endowment, which is constitutionally required to be managed for maximum returns to the endowment’s beneficiaries, the largest of which is the state’s public schools.

Idaho protected cabin owners from conflict bidders for decades under a 1990 law, but the Idaho Supreme Court overturned the law as unconstitutional last summer.

This week’s conflict auctions were the first since that 1990 law was enacted. In addition to the Nunamaker cabin site, another conflict bidder, James Hollingsworth, outbid relative Graham Sharman in a bidding war over a cabin site in the Pinto Point subdivision. Hollingsworth’s winning premium bid was $30,000 to secure the lease. He was required to pay Sharman the $132,000 appraised value of the cabin; and to prepay a year’s rent for the ground underneath it is to the state, at $21,720.

A third conflict auction held earlier this week for a Payette Lake lot also saw the current lessee outbid. Brady Peterson of Eagle won that auction with a premium bid of $6,000, after current lessee and Oregon resident Michele Cahill stopped at $5,000. In that case, the improvements, a decrepit trailer, were found to have zero value, so Peterson won’t have to pay Cahill. He paid the first year’s rent of $920 to the state in advance; the lot, in the Agate subdivision, isn’t on the lakefront like the Priest Lake sites.


Look here for the latest news on Priest Lake State Leases. 

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