Justices nix law protecting cottage leases

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BOISE, Idaho (AP) — The Idaho Supreme Court on Friday struck down a state law that shielded people with coveted leases of state-owned cottage sites on Payette and Priest lakes from competitive auctions.

The justices' unanimous ruling bolsters Attorney General Lawrence Wasden's claim that the Idaho Land Board isn't generating sufficient income from state endowment lands for schools.

Wasden, a Land Board member, took the unconventional step of suing the panel in December 2010. He contended the law was being used to circumvent the Idaho Constitution's requirement to generate the maximum return for endowment beneficiaries.

Legislators passed the law in 1990 to protect existing leaseholders on some of Idaho's most-desired vacation real estate from competitors. With its undoing, Wasden's office said public schools will benefit because auctions will generate more income.

"Over time, there will be a greater return to the endowment," Wasden told The Associated Press after the decision. "There's competition for these leases, and the market forces will be in operation."

Phillip Oberrecht, who argued the case for the cottage site leaseholders, didn't return a phone call seeking comment.

Idaho has 355 cottage sites at Priest Lake, just south of the Canadian border, and another 167 on Payette Lake north of Boise.

Payette Lake lessees signed 10-year contracts in 2001.

In 2010, just ahead of the contracts' expiration, the people with leases at Payette Lake filed a lawsuit, contending the state's plans to increase their annual payments from 2.5 percent to 4 percent of the average value of the land violated their right to renew their leases for another 10 years under terms identical to those in the expiring leases.

Wasden sued that December, contending the 1990 law allowing leaseholders to simply renew their contracts was unconstitutional.

He lost in a 3rd District Court decision, but the Supreme Court justices overturned that ruling.

They decided that lawmakers' efforts 22 years ago to shield existing leaseholders from competitive auctions flew in the face of the constitutional requirement for the state to reap as much as it can from endowment lands.

The justices said the 1990 Idaho Legislature went too far when it passed the no-competition law in response to what the statute called "consternation and dismay to the existing lessee at the prospect of losing a long-time lease."

The Idaho Land Board "has a constitutional obligation to maximize long-term financial returns," Justice Jim Jones wrote in the 15-page decision. "The Legislature's findings about the detrimental aspects of auctions are irrelevant."

The justices Friday also reversed a state court decision to dismiss the Payette Lake leaseholders' lawsuit over their right to renew their leases at 2001 conditions, but Jones suggested the likelihood the cottage-site holders would prevail was slim, given justices had just dumped the 1990 law.

"The Payette Lake Lessees face a daunting task in establishing that they have an unconditional right to renew their 2001 leases for a ten-year period on the same terms and conditions," justices wrote.

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