Idaho lawmakers return donations linked to lake lots

Leaseholders of state sites at Priest Lake target legislative leaders in a plea for action.

dpopkey@idahostatesman.comFebruary 9, 2014 

Almost 500 state-owned lakefront lots at Payette and Priest lakes are worth a total of about $200 million. This massive home sits on Payette Lake in McCall.

IDAHO STATESMAN FILE

  • COTTAGE SITE LEASE BASICS

    When Idaho became a state in 1890, it received 3.6 million acres in federal land grants. Trusts were established for these “endowment lands” with beneficiaries including K-12 schools, universities, veterans homes, prisons and mental hospitals. Sales and exchanges over the years have left 2.4 million acres. The Idaho Constitution says management must maximize long-term returns.

    The first leases of state lands for vacation homes date to the 1920s. As recreational property values on Priest and Payette lakes rose and “cottages” became million-dollar lakefront “cabins,” managing private homes on public land became controversial, complicated and troublesome.

    After years of struggling to balance the constitutional obligation with political pressure against raising rents, the Idaho Land Board voted in 2010 to gradually divest the state’s interest. Lots were to be sold or traded in a “market savvy” process, transferring $200 million worth of land to private hands.

    The governor, secretary of state, controller, attorney general and superintendent of public instruction make up the board.

    On Oct. 18, 10 lots were auctioned at Payette Lake, after lessees voluntarily applied to have the lots put up for sale. Incumbent lessees won all 10 auctions, 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.

    Three days earlier, the board rejected two big exchanges. One proposed trading 48 cottage sites at Priest Lake and 10 at Payette Lake 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. For exchanges to move forward, changes in the law are likely required.

    The Land Board has refocused on selling sites at voluntary auctions. In December, the board instructed the Department of Lands to offer voluntary auctions to 21 lessees at Payette Lake and 74 lessees at Priest who had been parties to canceled exchanges.

    The Payette auctions will be held in Eagle during the first week of April; the Priest auctions will be held in Coeur d’Alene, likely by the end of summer. The minimum bid will be the appraised value of the lots. 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.

  • DAN POPKEY

    As a kid, Dan spent Christmas break and several long summers at his paternal grandparents’ house near the Menominee River in Michigan’s Upper Peninsula. If he and his brother were quiet, they could startle turtles napping on logs. In college, he learned to water ski on the river, but just barely.

Scores of targeted campaign contributions — most of them below the mandatory reporting threshold — have been turned away by top lawmakers, who cited ethical considerations.

Stunned last fall by the Idaho Land Board’s cancellation of land swaps involving 69 cabins at Priest and Payette lakes, lot lessees are seeking a remedy this year.

But with letters that accompanied January contributions suggesting that “money buys elections” and “I hope I can buy a little of your attention,” some leaseholders have put legislation at risk, said Sen. Shawn Keough, R-Sandpoint, whose district includes Priest Lake.

“I’m really disappointed with what some of the letters have said,” Keough said. “But I believe folks did this innocently.”

Keough is working on a bill to clear the way for land exchanges that could help about 350 leaseholders at Priest Lake in Bonner County, as well as about 140 at Payette Lake in Valley County.

“They’re angry, they’re confused, they’re hurt, they want closure,” Keough said. “But this is a distraction and it casts a bad light on the folks at the lakes.”

‘DETRIMENTAL’ TO CAUSE

On Jan. 29, Priest Lake State Lessees’ Association President Denny Christenson wrote his members saying, “Let there be no misunderstanding; your PLSLA Board had absolutely nothing to do with these donations. ... It’s unfortunate these donations may result in some legislators forming opinions of Priest Lake lessees in general that are detrimental to your best interests.”

Christenson, of Spokane, told the Statesman that he’s confident the letters were initiated among the 10 percent of lessees who are not members of his group, though he said some of his members did write lawmakers and make contributions.

Contributions ranged from $10 to $150, lawmakers said, but most were at $49 or $50 — just below the $51 limit at which gifts must be itemized on Sunshine reports.

“Somebody must’ve told them the breaking point is $49,” said Rep. Eric Anderson, R-Priest Lake, who lives on land he owns at the lake but has neighbors on 11 nearby state lots.

The $49 and $50 contributions troubled Secretary of State Ben Ysursa, a member of the Land Board who oversees Idaho’s campaign finance disclosure laws.

Though not illegal, Ysursa said, “When somebody’s sending that stuff around, they’re obviously doing it not to have it disclosed, and that goes against the fiber of the law. I don’t think it was a very good public-policy tactic.”

Keough and Anderson are working on legislation to loosen what Gov. Butch Otter called a “noose around our necks” — a state law that says exchanges must involve “similar lands of equal value, public or private.”

Two complex exchanges involving cabin sites and commercial buildings were canceled in October, in part because of that provision, dashing the Land Board’s four-year effort to divest itself of the sites for more easily manageable and profitable investments. The sites are a tiny slice of 2.4 million acres of endowment lands benefiting state institutions, principally education, which must be managed to obtain the maximum, long-term return.

Christenson said in his Jan. 29 association newsletter that the denial of the swaps was “shocking” and “maddening” after all the effort lessees made to arrange the exchanges. Now he fears letters suggesting that contributions might buy influence “could pollute” reform efforts.

FAILING ‘SMELL TEST’

One Priest Lake leaseholder, Mark Finley, of Spokane, said he doesn’t understand the fuss.

“Am I supposed to believe that a generic $15 grass-roots campaign donation will actually ‘buy’ support or the attention of a senator or representative who last election raised $20,000 to $40,000?” Finley asked.

But several lawmakers returned the money, including Senate President Pro Tem Brent Hill, R-Rexburg; House Speaker Scott Bedke, R-Oakley; Senate Majority Leader Bart Davis, R-Idaho Falls; Senate Minority Leader Michelle Stennett, D-Ketchum; and House Assistant Minority Leader Grant Burgoyne, D-Boise.

Burgoyne, a leading critic of some of the Land Board’s commercial investments, said he got about 25 contributions and returned them all.

“It’s probably not unlawful to receive a campaign contribution along with a plea for legislative action, but it didn’t pass my smell test,” he said.

Davis said he received about a dozen “heartfelt letters on an issue that is of great concern to them.” He returned the contributions with a letter saying that “this contribution appears to be so closely tied to support of a specific legislative result that I am uncomfortable accepting it.”

Bedke, who said he received about 30 contributions, returned them all, saying that “no financial contribution is necessary to get my attention on this matter.”

He added: “I am working, and will continue to work, toward an effective and satisfactory solution.”

Hill advised his GOP colleagues to return the money, as he did with a letter of explanation.

“I am returning your check — not because I am not grateful — but because I have a personal standard that I do not accept campaign donations during the legislative session or related to specific legislation,” Hill wrote. “We will seek a speedy and fair resolution.”

A PATH TO REFORM?

Keough and Anderson said they kept their checks, which they said didn’t include the sort of “something for something” language others received. They also cited long-term relationships with contributors who have given many times.

“These are my neighbors,” Anderson said. “They have a need for a legislative remedy. That’s no different than the dairymen or my logging friends or my public power friends.”

Keough’s Senate Bill 1277, introduced Monday, addresses the “similar lands” issue, allowing exchanges for land of equal value, regardless of use. Her five co-sponsors include Anderson, Burgoyne and House Majority Caucus Chairman John Vander Woude, an Ada County lawmaker who has been a critic of Land Board investments in commercial property.

SB 1277 would ban swaps for land that have as their primary value commercial buildings, but would allow swaps for buildings “continually used by a public entity for a public purpose.”

Although the recent contributions “cloud the effort,” Keough said there is broad consensus to end the “archaic practice” of leasing land to the owners of cottages. Cottages in most cases is a misnomer, because many are million-dollar vacation homes with multigeneration emotional connections.

Keough said she hopes openly discussing the returned money will clear the air and the way for reform: “We want to be ethical, so it’s good to have this discussion.”

Burgoyne said he thinks the fact that most lawmakers returned the money should allay concerns about money for action.

“I don’t think it gums it up,” he said, “because I’m assuming other people have handled it as I have.”

Dan Popkey: 377-6438, Twitter: @IDS_politics

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