totaled $15,591.36 in 1996, with individual 

 cabinsite lease rates ranging from $337.05 to 

 $1,147.13 annually. The current average gross 

 value (not including administration cost) is 

 $3.90 per acre ($15,591.36/4,000 acres, the 

 approximate Beaver Lake Project area). Given 

 the location of the project area and the lakes 

 and forest within this project area, there is 

 potential to develop more cabinsites or 

 homesites in the Beaver Lake Project area. 

 DNRC does not have an inventory of potential 

 development sites. 



Another factor that could impact cabinsite 

 leases is the court ruling by Dorothy McCarter, 

 District Court Judge, Lewis and Clark County, 

 that the renewal of cabinsite rentals are not 

 limited to 3.5% of their appraised value and 

 the Department must obtain the fair market 

 value of that use. This ruling should result in 

 a fee increase for the cabinsite leases. The 

 Department is currently considering options in 

 this case. Currently, DIVIRC is competitively 

 bidding new leases. The impact on new leases 

 would be less now and more in the future 

 when lease rates may not decrease to the 3.5%. 

 Some of the lessees may not be able to afford 

 the new higher price; therefore, there may be 

 some turnover. For the potential over the 

 short term (5 years), DNRC could have numer- 

 ous cabinsites Statewide that would be on the 

 market for lease. 



SELLING OF CABINSITES/ 

 HOMESITES 



There was interest by some of the cabinsite 

 leaseholders to buy their lots. The Land Board 

 makes the decision to sell or not to sell a 

 cabinsites. The following is the current direc- 

 tion related to the cabinsite/homesite analysis 

 from the Land Board dated 10/94, Cabin/ 

 Home Site Sale Financial Analysis . 



The financial analysis compares (1) the value 

 of land, plus cabinsite lease revenues if the 

 land were not sold; (2) the value of the princi- 

 pal and interest earned if the land were sold. 

 This analysis is affected by the following 

 variables: 



the rate of land value appreciation 



the State cabinsite lease rate 



the rate of return on the trust fund. 



These variables are addressed in several key 

 assumptions: 



• Evaluate the financial returns of the keep 

 versus sell options over period of at least 

 60 years. 



As a measure of future rate of return on 

 trust investments, use a long-term bond 

 rate of 8%. 



4. 



Use Department of Revenue's (DOR) 

 changes in appraised value over a 10-year 

 period to project the rate of appreciation of 

 the value of the homesite. 



Ji -livflkttrtiAAi <jAa>«i 



Assume that in no case would land appre- 

 ciate at less than 1% annually over the 60- 

 year period. 



• " f I 



~-1 



Present the analysis of the sale of the 

 homesite as defined in the State lease 

 separately from the sale of State agricul- 

 tural or grazing land. 



Use the current homesite or cabinsite lease 

 rate (i.e. do not anticipate changes in the 

 cabinsite lease rate). 



■;>■•>•■ 



CURRENT ASSET VALUE 

 OF TRUST LANDS IN THE 

 PROJECT AREA RELATED 

 TO A LARGE- 

 DEVELOPMENT 

 PROPOSAL % 



Given the location, current uses, and condition 

 of the forest in the project area, there is poten- 

 tial for a large-development proposal in the 

 project area. Public ownership would probably 

 limit the potential of a large development on 

 this tract because of the public environmental 

 review process and the political nature of the 

 process. During the collaboration process, 

 proposals for development were requested 



Chapter III: Affected Environment 



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'1U43 



