Bill would reform state cabin site sales

State Auditor Troy Downing has been a dissenting voice on cabin site sales as a member of the Montana State Board of Land Commissioners since he took office in 2021. Senate Bill 49 brought by Sen. Mike Cuffe, R-Eureka, would make procedural changes backed by Downing, and so far has seen broad support as it easily passed the Senate with less than a handful of “no” votes.

On Monday, the House Natural Resources Committee will take up SB 49.

Downing believes the cabin site sale process set in law in 2013 may suppress sale prices and has routinely voted against sale offerings and sales. He has been the lone dissenter on the all-Republican Land Board, which includes Gov. Greg Gianforte, Attorney General Austin Knudsen, Secretary of State Christi Jacobsen, and Superintendent of Public Instruction Elsie Arntzen.

Currently, certain state lands are offered for lease as recreational cabin sites. A lessee is able to construct “improvements,” ranging from roads and utilities to cabins and other structures.

In 2013 due in part to concerns over rising lease rates, the Legislature passed a law allowing lessees to petition the state to purchase the land — a process that includes appraisals, competitive bidding, and approval from the Land Board.

But Downing has maintained that sale term under the law disadvantages the state and the Land Board’s constitutional duty to maximize revenue off of state trust lands that go to fund beneficiaries such as public schools.

“We owe that duty to the people of Montana that we are maximizing these sales,” he said in an interview.

Specifically, Downing has taken issue with a provision that allows the lessee to pull the sale up to 10 days before auction. That means if another bidder comes in, the current lessee may simply cancel the auction rather than go to competitive bidding. He believes that stifles the market from dictating sale price and pointed to the vast majority of cabin sites that go to the current lessees at the minimum bid price.

Lessees do have right of first refusal to match the high bid.

Downing has also raised concerns over appraisals of the property, saying the appraisal should focus on the revenue produced by the property rather than comparable sales as is the current practice.

In 2021, a bill introduced late before transmittal to make reforms did not advance.

That bill saw some opposition from lobbyists and some lawmakers involved in the 2013 law who felt it would unfairly stack the deck against long-term lessees who wanted to purchase properties they had invested in.

Downing says he is sensitive to those concerns but also believes reforms are necessary.

SB 49 only focuses on the competitive bidding process by disallowing a lessee from pulling the property from auction once another bidder places a bond.

“On this (bill) we did it much more targeted, and we said let’s just see what’s the biggest hindrance in having market forces in that bidding process, and for me I thought the fact that that lessee could cancel the sale as soon as someone registered to bid on it,” Downing said.

Downing believes the reform could offer “comfort” to outside bidders that they will have a true opportunity to bid, and will assuage his opposition on the Land Board.

“Once you have multiple bids and competing bids, then I believe you have true value discovery and that gives me as a member of the board of land commissioners that there are market forces and there is value discovery that is realistic,” he said.

When asked if the bill could dissuade lessees from entering the sale process due to less favorable terms, Downing said he was not concerned. So long as the current leases produce adequate revenue, he believes the state’s interest is protected and lessees could continue to maintain the lease. Lease rates may go up, but so do property taxes, he said.

The House Natural Resources Committee will hear SB 49 at 3 p.m. on March 13.