Update and Land Board proposed Alternative 3b

Hello Lessees!

I wanted to give you an update of recent activity on our cabinsite situation. The Land Board is scheduled to take action at their next meeting. This is it, folks!  Please try to attend the meeting if you can- it is extremely important that we have a strong showing. The meeting will be held in Helena in State Capitol Room 303 on Monday, Oct. 19 at 9:00 a.m. We are the second item on the agenda, so don’t be late! At least this time, we won’t have to sit patiently through hours of testimony before our agenda item comes up.

The DNRC received 59 comments on the proposed Alternatives, most from leaseholders. Thank you for sending in your comments! You should know that two lengthy letters were also received from representatives of the Trust beneficiaries – one from the Chief Counsel of the Montana University System and one from Roy Andes on behalf of MonTRUST.  These letters went into great detail about how the Land Board has a “duty to deliver” at least 5% of appraised value and how none of the proposed Alternatives does that. The University System folks suggested taking away the phase-in and considering an even higher rate! The MonTRUST folks similarly dislike the phase-in, but at least they proposed an innovative new solution – going to a competitive bidding process. (However, they did not provide any details about how this might work.) Both groups intimated that they will bring suit if they don’t get their way.

In response to all these comments, the DNRC has crafted a NEW Alternative 3B based on the original Alternative 3. The description they have provided of Alternative 3B, which they are recommending for approval by the Land Board, follows:

Uses “projected 2009 DoR value” (or to time of review) which is the 2003 DoR value projected to 2009 at 6.53% annually. Lease rate starts at 5% and escalates at a Lease Factor Index (LFI). The set growth would be established annually based on the average of Consumer Price Index (CPI) of the previous year and the annual Real Estate Appreciation (REI) that is reflected over the most recent 25 year period. The REI would be readjusted after each DoR appraisal cycle. The LFI would be capped at 3.25% – 6.5% (3.25% represents the average CPI from 1983-2008 and 6.5% represents the average annual appreciation of real estate from 1983-2003.) Once the base lease fee is established, the annual lease fee would be adjusted to the LFI.

As you can see, though this would be a bit better to start for lessees in areas that saw dramatic increases from the 2003 to 2009 appraisal cycle, it would also increase our lease fees EVERY YEAR based on this new LFI. So, we’d start with 5% and go up from there each year!! In addition, it does not include any phase-in, so all rates would go up earlier. (It is unclear if they would all go up starting in 2010 or if the current phase-in would be allowed to finish. It’s also unclear if this option would eliminate the A-E cycle.) We thought they might be willing to propose a open bidding Alternative, following the MonTRUST suggestion, which was at least worth exploring, so this new development is very disappointing.They also further clarified their intentions regarding assistance for low-income lessees. Get this – whatever amount of reductions low-income lessees receive in this new “assistance” program would be spread to the rest of the lessees, increasing their fees even beyond the 5%+ !! 

The DNRC will provide more information on Alternative 3B next Tuesday at a meeting for all the attorneys. Ron Waterman will represent us at that meeting and I will email everyone if the meeting produces any new information. However, as we now understand it, we are in complete opposition to this new Alternative. 

I have attached the entire text of the DNRC’s presentation for the upcoming Land Board meeting. I hope you will all attend! We are planning a presentation of expert testimony – if they won’t listen to us, perhaps they will listen to mortgage bankers, realtors appraisal experts, etc.to get some idea of the reality of the market for these leases. In any event, it looks as if a decision will be made at the meeting so we will at least know what we are fighting.

We have also begun discussions with Ron Waterman about a possible law suit. Yes, I’m afraid it’s come to to that. So, please send in your contributions if you haven’t already. Checks should be made out to “Montana State Leaseholders Association” and mailed to “MSLA, c/o Tanko Law Office, 392 First Aven EN, Kalispell, 59901″.

That’s it for now. Sorry this couldn’t have been better news. Keep up the good fight!!

Lisa Owens

Oct 19 Land Board Meeting Agenda – New Cabinsite Alternative 3b