Endowment watch: Big changes at Priest Lake

Change — potentially costly change — is coming to the state-owned cabin sites along North Idaho’s Priest Lake.

And that could affect state endowment beneficiaries, including the public schools.

In a story in Monday’s Spokane Spokesman-Review, Betsy Russell outlined the changes:

  • When the 354 cabin sites come up for renewal on Dec. 31, they will be up for “conflict bidding,” which means a newcomer can come in and outbid a current leaseholder.
  • State appraisals on the cabin sites are up — big, by 84 percent. These appraisals are the foundation for the lease rates.

The conflict bidding may have a limited effect; the Department of Lands doesn’t know how many bidding battles to expect. The higher appraisals could have more of an effect. Lands Department Director Tom Schultz tells Russell that the state could see 8 percent to 30 percent of leaseholders default — and walk away from their leases.

However, in a March meeting of Land Board, the panel of five statewide elected officials who preside over state endowment lands, Schultz said the state could absorb vacancy rates of up to 47 percent and still come out ahead.

The cabin lease debate is an old clash of competing interests, pitting the interests of longtime leaseholders against the state’s constitutional mandate to “secure the maximum long-term financial return” from endowment lands.

And K-12 is the largest beneficiary.

Public schools received nearly $31.3 million in endowment payments in 2012-13, accounting for nearly two-thirds of the total payments of $47.5 million.

The Land Board is scheduled to meet next week.