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State sells cabin lease sites worth $10 million in Missoula County

Posted at 2:30 PM, Feb 10, 2020
and last updated 2020-02-10 16:30:11-05

A program created to sell off state cabin leases to buy more state land has raised more than $10 million in Missoula County over the past six years.

This week, Bob Storer, Montana Department of Natural Resources and Conservation Trust Land Program manager, told Missoula County commissioners that since 2014, the DNRC has sold 72 cabin sites in the county as of the end of the year and five more have sold since.

The money from all the sales has topped $10 million, which has gone into a state land banking account. That also means that local governments will rake in an estimated total of $74,000 a year in property taxes from the new owners.

“Most of our cabin sites are in the Seeley Lake country,” Storer said. “Almost without exception, the cabins were bought by the lease holders.”

Most state land is school trust land, parcels that the U.S. government gave to each state to use for raising money for schools. The state is expected to get the best rate it can on state land leases to support education. So each parcel should produce annual income from activities such as agriculture, timber or recreation.

For decades, the state managed trust land leases for hundreds of cabin sites , usually along lakes or rivers. But the state didn’t increase lease rates much for years – some long-term families were still paying as little as $25 in the 1990s – until a watchdog group took the state to court, arguing the leases weren’t raising all the money they could.

By the time the state prepared to raise the rates to 5% or more of the appraised property value, property values were skyrocketing, and lease owners protested the sticker shock. Some vacated their leases, so the trust fund was receiving no money for those.

As a compromise, Missoula state legislator Tom Facey carried a bill in 2013 that allowed lease owners to volunteer their parcels for auction so they could buy them outright if they wanted. Like sales of other state land, money from the cabin sales would go into a land bank account to allow the state to buy other revenue-generating property.

So far, the DNRC has sold a total of 111 cabin sites on 261 acres. The Southwestern Land Office has sold one-third of its sites, which accounts for almost half of the sites sold in Montana, since most are in the western forests. The goal for the Southwestern office is to sell another 20 sites a year over the next two years, Storer said, even though more than 90 lessees have already volunteered their properties.

Even though the properties are put up for public auction on the DNRC website, the lessees have usually ended up with the winning bids, Storer said.

But as state property is being rapidly sold, finding other productive property to buy is a challenge for the DNRC, which has to follow a public process, said Mike O’Herron, DNRC Southwest Land Office manager. And property values aren’t dropping.

“We can’t act as fast as private buyers,” O’Herron said. “If we saw a really good situation and had money, we probably still couldn’t move fast enough.”

Storer said the Legislature mandated the cabin site sales, so he’s focusing on that more than acquiring land. But the priority for acquisition is income-producing lands that generate as much or more revenue as what was sold and that help consolidate or provide access to other state properties.

“There’s a lot of balancing that goes on, because every parcel has an associated beneficiary trust, such as K-12 or a college, that expects similar revenue” Storer said.

According to a January DNRC land banking report, the DNRC bought no new land in 2019. In 2018, the agency bought about 10,000 acres of timber land in the Stillwater drainage of Flathead County for about $4.5 million and about 17,000 acres of agricultural land in Rosebud County for $11 million.

Contact reporter Laura Lundquist at .