Cabin site lease issue could head to court

HELENA — Gov. Brian Schweitzer on Monday blasted legislation that reshapes the way the state leases cabin sites, saying it is sending the state toward a certain lawsuit.

Schweitzer, who chairs the Montana Land Board, was reacting to a recent letter from the Montana University System indicating it may indeed launch a lawsuit over the issue.

The rate the state charges leaseholders of prized cabin sites has long been a political sticky wicket, and efforts by the Department of Natural Resources and the Land Board to raise the rates about 40 percent statewide met with stiff resistance from leaseholders. The board argued that the constitution requires the state to maximize income from lands used to benefit schools in the state.

Leaseholders say the higher rents make the properties far too expensive, and render their cabins and improvements worthless.

The Legislature, with broad bipartisan support, earlier this year intervened and reduced the potential increases with Senate Bill 409. Schweitzer said he let the bill become law without his signature because it was passed by a veto-proof majority.

Legislative staffers estimate the difference could cost the state up to $5 million over three years.

The college system, which relies on money from the leases, argues the legislation unconstitutionally sets the minimum bids too low.

Sheila Stearns, commissioner of higher education, pointed out in the letter that auditors have in the past dinged the DNRC for failing to charge full market rate for the leases.

Stearns said that since lawmakers have adjourned until 2013, and the DNRC must stick to the new law in the interim, the courts may be the only place to settle the matter.

"While I would welcome any suggestions you have to address this matter in an appropriate manner, at this point it appears that a judicial clarification may be the only practical solution to the uncertainty existing with regard to Senate Bill 409," Stearns wrote the land board.

Schweitzer said at a land board meeting Monday that he agrees the Montana Legislature's bill was too beneficial for cabin-site leaseholders. He said the Land Board took a long look at the issue and carefully weighed the competing concerns before setting rates high enough that it feels the state is getting a fair shake.

The governor said his staffers warned lawmakers that their "giveaway" to the leaseholders would lead to the courts, who in the past have told the state it must charge more than the amount set by Legislature.

"Thank you to the Legislature for this problem," Schweitzer said.

Supporters of the legislation countered that the state's rate was too high and would cause people to abandon their leases. The legislation aims to set up an auction system that will find the fair market value, said the bill's sponsor, Republican state Sen. Bruce Tutvedt of Kalispell.

"Their process is not functioning properly and the lessees are going to leave and they are going to leave in large numbers," he said in an interview. "You don't go out of your way when you run a restaurant to kick all your customers out."

Tutvedt said the state's system of establishing the price is "archaic." He said his bill envisions the state writing rules to carry out fair-market auctions for the leases when they are up for renewal.

"I think it is going to be kind of fun to have them stand up in front of the court and argue the market isn't the best place to set price," Tutvedt said. It would be rather humorous to have them stand up and say that. And we are going to make them say that."