NFH 2012 CONVENTION
April 12-14, 2012
National Forest Homeowner’s 2012 Convention will be held in Vancouver at one of our favorite locations, the Heathman Lodge. Our theme this year is “Blazing New Trails” which we hope to do with presentations on the Cabin Fee Act and all those other issues of cabin permit ownership. Our optional event is a tour – by lantern – of Fort Vancouver under the guidance of docents dressed appropriately for the Fort’s historic past.
Come and join us. Attached is the Schedule at a Glance and a Registration Form to download, fill in and send. We hope to see many of you there!
SENATE BILL 1906
Submitted by: The Cabin Coalition 2 and the National Forest Homeowners
January 14, 2012
Since the passage of the Organic Act in 1915, the Recreation Residence Program has been a longstanding valid use of National Forest lands, but is now threatened by the fee setting process specified in the Cabin User Fee Fairness Act of 2000, commonly referred to as CUFFA. The current use of a fee simple land appraisal to set value has not worked for over 40 years due to interdependent equity interests whereby the permittee owns the cabin while the government owns the land. Both location and the cabin structure influence market rents and sale prices. Separating these two influences is difficult and subjective. The Cabin Fee Act, which is supported by most cabin owners, acknowledges the real nature of a Program with interdependent interests and offers a new and badly needed system. The Act will simplify and improve the fee-setting process. It will encourage better relationships between the Forest Service and permittees and will reduce agency administrative workload and expenses.
The Act institutes a fair and reasonable annual User Fee and also establishes a Transfer Fee, payable upon sale of a cabin, to capture the influence of the cabin lot’s location upon sale price. In this way, the Act provides fair compensation to the U.S taxpayer, while recognizing that cabin owners convey value to the land and location at their expense. Cabin owners must maintain the site, remove dangerous trees and non-native vegetation and often provide and pay for utility infrastructure including power, water systems, and septic and sewer systems that become attached to the land and benefit all users of the forests.
Survey data, compiled by the National Forest Homeowners in 2009, indicated almost 35% of cabin owners will reach their affordability breakpoint in the current CUFFA appraisal cycle. Cabin permit holders are typically middle class, often retired and on fixed incomes. When these folks can’t sell, we estimate roughly 15% of cabins (2,100) will have to be torn down or removed at the owner’s expense. U.S. Treasury revenue loss will be approximately 30% of the total potential fee revenue, while local governments and communities will also suffer tax revenue losses and loss of sales and services. Cabin losses will also reduce volunteer labor, forest stewardship and infrastructure support provided by cabin owners.
The Cabin Fee Act:
The Act establishes an affordable User Fee, indexed annually, that helps maintain cabin value and does not destroy the ability to sell the cabin if the current owner cannot, or chooses not to, pay the fee. Instead of fees ranging from $125 to an astonishing $76,000 annually under CUFFA, annual User Fees will range from $500 to $4500 per year. The $500 tier reflects the cost to administer the program (per permit) as determined by the Forest Service. The $4500 tier reflects the upper limit of affordability identified by the survey noted above. (Current Forest Service appraisal data indicates that 17.1% of the new fees exceed $4000, with 3.7% exceeding $7000). Nine fee tiers will replace the current CUFFA fee structure. The User Fee tiers were determined by balancing the rights and privileges that all permit holders share, regardless of location, while acknowledging that location does influence the value of the permitted use. This balance of common rights with differences for location yields a fee structure where the highest fee is nine times the lowest fee. This contrasts with fees under CUFFA where the highest fees are more than 100 times greater than the lowest fees.
The Cabin Fee Act requires the assignment of each permitted lot to one of nine fee tiers, based on the rank order of current appraised values. The lowest 8% of appraised lot values are assigned to the $500 tier. The highest 7% are assigned to the $4,500 tier. Following this process, User Fee revenue is projected to be about $34M when fully implemented. User Fees are adjusted annually by a five year rolling average of the IPD-GDP index. This broadly-used Department of Commerce index provides for a reasonable, straightforward method for increasing fees annually, while ensuring user fees keep pace with the market.
The Transfer Fee is intended to capture the value influence of the cabin lot’s location on the National Forest and is paid when that value influence is actually realized at the time of sale. The Transfer Fee addresses possible “windfall” profits, an issue that has been raised by the Forest Service. The Transfer Fee has two components. First, a flat fee of $1,000 is collected for all cabin sales and transfers. Second, if the sale price exceeds $250,000, an additional 5% is collected on the sale price exceeding $250,000 up to $500,000 and an additional 10% on sale amounts exceeding $500,000.
Under CUFFA, potential purchasers are deterred by the uncertainty of future permit fees. While under the CFA, cabin marketability is not encumbered, because cabin owners will have full knowledge of the indexed annual User Fee and both a seller and buyer can factor the Transfer Fee into their negotiations at the time of sale. Moreover, the Act provides comparable long-term annual revenues to the U.S. Treasury after consideration of cost savings by elimination of appraisals and revenue lost from abandoned cabins, if CUFFA stands unchanged.
With the elimination of the appraisal process under CUFFA, the Forest Service will save nearly $1 million annually. The complexity and expense of the appraisal process will be replaced with a cost effective fee system and greatly simplified program administration.
We can compare this fee structure to the broader market of public and private cabin lease programs. A market survey, Comparison of Recreational Home Site Leases <!--[if !supportFootnotes]-->[1]<!--[endif]--> reviewed over 11,000 cabins in programs similar in character to the Forest Service Recreation Residence Program. This survey examined the market for similar cabin programs and further validated the use of public forest lands for recreation residence purposes. While user fees ranged widely due to variations in permit and lease terms and location considerations, the average user fee was less than $1,000. This is considerably less than the average fee of $2,400 under the Cabin Fee Act. We offer this as clear evidence that the proposed fee structure provides a fair return to the U.S. Government and is based on sound market principles.
With predictable and affordable fees under the Cabin Fee Act, we expect all 14,200 current permits to remain active, keeping the Forest Service Program within reach of the typical American family. By contrast, while CUFFA is expected to provide similar total revenue over time, we project the unaffordable high fees and uncertainty will result in a decline in the number of permit holders under CUFFA to less than 12,000 over the next decade, thus reducing the typical American family’s participation in the Program. This same pattern of permit loss is likely to be repeated in future appraisal cycles under CUFFA, further eroding the Recreation Residence Program.
The strength of the Cabin Fee Act is its simplicity. The simple and straightforward fee structure provides long-term predictability and affordability for the cabin program plus saves significant administrative time and expense for the Forest Service. These savings allow for the redeployment of Forest Service resources away from managing appraisals, re-appraisals and permit fee appeals to a more productive delivery of programs and public services. The Cabin Fee Act provides a true win-win outcome for the cabin owner and the U.S. Forest Service while providing market rents for the U.S. Taxpayer.
In summary, the Cabin Fee Act of 2011 ensures the long-term viability of the Recreation Residence Program and produces cabin permit fees that:
1. Are affordable and determined by the true ‘cabin market’.
2. Are simple, understandable and predictable.
3. Are revenue neutral by maintaining current revenues and fair return to the U.S. taxpayer.
4. Address the complexities of interdependent ownership interests in the Program.
5. Impose fees when actual benefits are received.
6. Maintain the ability to sell cabins.
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Comparison of Recreational Home Site Leases, 2009. Produced by NFH and the Cabin Coalition 2. |
The full text of House bill H.R. 3397 - Cabin Fee Act of 2011 can be found at the following link: http://www.gpo.gov/fdsys/pkg/BILLS-112hr3397ih/pdf/BILLS-112hr3397ih.pdf
The full text of the Senate bill S. 1906 - Cabin Fee Act of 2011 can be found here: http://www.gpo.gov/fdsys/pkg/BILLS-112s1906is/pdf/BILLS-112s1906is.pdf
The results of the recent 2012 Cabin Fee and Sales Survey are available now.
Click here to download a document with discussion about the results.
Please also go ahead and complete the survey if you have not yet done so, as your contribution will only improve the data.