Wading into a dispute over federal land use that dates back to the days of homesteaders and miners, Congress is looking to overhaul the process of assessing fees for private vacation cabins and houses on national forest land.
Under a special U.S. Forest Service program, private individuals can own a cabin but not the land on which it stands. The cabin owner pays the government an annual fee, which is set at 5 percent of the appraised land value. A survey by the National Forest Homeowners association found that most of the more than 14,000 homeowners are unhappy with the current fee system, cabin owner Doug Gann told a Senate subcommittee last year.
“Over the last several years, longtime cabin owners of modest means, whose families have loved and maintained their cabins for generations, have expressed deep concern that their cabin stewardship is being jeopardized by sharply escalating fees, some of which are excessive, above market and unfair,” Gann said.
Restrictions on the land and difficulties finding comparable recreational properties yields inaccurate appraisals that result in fees that range from $125 to as high as $76,000 a year and can be “well above market value,” he said.
A Senate Energy and Natural Resources subcommittee is scheduled to hear testimony Wednesday on legislation (S 1341) by Montana Democrat Jon Tester that would cap the fees. The House Natural Resources Committee approved a similar bill (HR 1159) in March sponsored by Chairman Doc Hastings, R-Wash. The Forest Service backs the Senate bill.
Both bills would create a tiered system of fees. Homes would be placed in a tier based on their appraised value. Annual fees of $500 to $5,000 under the House bill or up to $5,500 under the Senate bill would be assessed, depending on the tier. No fee could increase from the previous year by more than 25 percent during the transition to the new system.
Once these fees are set, they would only be adjusted in the future based on inflation — rather than continued reappraisals as the current system requires.
Under the Senate bill, 70 percent of cabin owners would pay fees of $2,000 or less, and under the House bill, 71 percent would pay fees of $2,500 or less. A $1,200 fee would be assessed when a cabin is sold or ownership is transferred.
“During these tight economic times, the intent of this bill is to keep the fees affordable for people such as teachers, factory workers and retirees and not just millionaires, which is what will happen if we don’t address the problem now,” Hastings said at a subcommittee hearing in 2011. “The current system has resulted in unrealistic arbitrary fee hikes that are completely unaffordable for average families.”
The Hastings bill would cost $8 million in lost fees over the next decade, according to an estimate by the Congressional Budget Office. Estimates for previous proposals ranged from a decrease in revenue of $145 million to an increase of $8 million over 10 years. The Forest Service estimates that revenue from cabin fees has more than doubled, to more than $27 million, since 2006.
Gann argued that the current revenue is more than the Forest Service needs — or even uses, as most of the funds go to the general treasury, with 25 percent earmarked for local counties to spend on roads and schools. Cabin owners say dramatic fee increases will cause they to abandon the vacation homes — most in Western states — resulting in a loss in revenue.
A century ago, permits were issued annually and owners complained about the uncertainty of the renewals. To give private owners more security, Congress passed a law in 1915 that set up special-use permits for 20 years.
Fees were originally nominal but in the 1950s, the cost was tied to appraised land values. Because the fees were adjusted every 20 years based on new appraisals, owners would be hit with huge increases when new fees kicked in.
An overhaul in 2000 (PL 106-291) purported to limit the rate increases by requiring appraisal adjustments every 10 years. But Gann said the final law didn’t include protections that were promised. Owners were again shocked by high appraisal values in 2007, and lawmakers have been floating bills since 2010 to again overhaul the system.
More than 20 percent of owners pay fees of $4,000 or more, according to a survey by Gann’s group. Under the proposed House and Senate bills, 10 percent to 14 percent of owners would pay fees that high.
Leslie Weldon, deputy chief of the National Forest System, told a Senate subcommittee last year that the agency supports providing cabin owners with predictable fees but objects to untethering the fees from land value.
“Fees below market value can lead to substantial profits when cabins are sold, as the sale prices will reflect the value of the locations more than the value of the cabins,” she said. “To reduce the likelihood of these profits, the proposed fee schedule should be more closely tied to market value.”
Cases of owners reaping a windfall from the sale of their properties are few and far between, Gann testified. His group found that the average sales price from 2000 to 2009 was about $138,000, and 92 percent of all sales were under $250,000.
By clearing vegetation and paying for utility and infrastructure improvements “cabin owners convey value to the land and location at their expense,” he said, adding that the legislation would be “an equitable approach that balances the interests and needs of cabin owners with the public interest in obtaining a fair return on those public lands.”