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EXECUTIVE SUMMARY NATIONAL FOREST HOMEOWNERS AND THE CABIN COALITION 2

TO THE U.S. SENATE COMMITTEE ON ENERGY AND NATURAL RESOURCES

SUBCOMMITTEE ON PUBLIC LANDS, FORESTS, AND MINING REGARDING S.1341, THE CABIN FEE ACT OF 2013

NOVEMBER 2O, 2013

(i) Recreation residence permittees on our National Forests are being billed exorbitant annual fee increases due

to the fatally flawed Cabin User Fee Fairness Act of 2000 (CUFFA), endangering the future of a historic, family-

centered, middle class recreation program that has benefitted our National Forests and thousands of families

for nearly a century.

(ii) CUFFA was to establish a more consistent procedure for determining user fees to correct for flaws in the

appraisal process. But CUFFA failed to correct these flaws. Instead, it codified an appraisal process that

wrongly equates the restricted use of public lands to private, fee simple land ownership.

(iii) The Cabin Fee Act (CFA) will reform, simplify and improve the fee-setting process, allowing affordable permit

fees, indexed annually, that provide predictable fee increases for the use of the land while helping to maintain

cabin value and marketability when sold.

(iv) The CFA calls for the U.S. Forest Service to review permit fees after ten years and recommend to Congress any

changes to ensure fees maintain a fair return for the use of the land for recreation residence purposes. This is

modeled after the special-uses fee review provision applicable to ski areas.

(v) The CFA allows the Forest Service to retain permit fees for the administration of this and other recreation

programs, strengthening the longstanding partnership between the Forest Service and cabin owners, and

helping ensure the long-term viability of this Program for future generations.

(vi) Oppressive 2013 fee increases have already caused many cabin owners to seek desperate measures. A few

cabin owners have sold to more affluent buyers able to pay extremely high fees. Other cabin owners are

unable to sell because no potential buyer will purchase a perpetual annual obligation to pay such high fees.

Still others, having no remotely feasible options, are simply not paying the current fee, hoping that the CFA

passes soon.

(vii) Thousands of cabins are in immediate jeopardy and hundreds more will be threatened in future appraisal

cycles under CUFFA, seriously eroding the Recreation Residence Program and producing less revenue than the

proposed CFA fee system over a longer period of time.

(viii) Congress has previously recognized recreation residences as important components of the National Forest

Service Recreation Program. They make significant contributions to the health of the National Forests, to the

healthy recreation of generations of American families and to the economic vitality of local gateway

communities.

(ix) To institute fairness into permit fees and ensure the continuation of the Recreation Residence Program, we

ask for your support to enact the Cabin Fee Act of 2013 (S.1341) this year!

Submitted by: the National Forest Homeowners and Cabin Coalition 2

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STATEMENT OF NATIONAL FOREST HOMEOWNERS AND THE CABIN COALITION 2

TO THE U.S. SENATE COMMITTEE ON ENERGY AND NATURAL RESOURCES

SUBCOMMITTEE ON PUBLIC LANDS, FORESTS, AND MINING

REGARDING S.1341, THE CABIN FEE ACT OF 2013 NOVEMBER 2O, 2013

Introduction

This statement from the National Forest Homeowners (NFH) is made on behalf of the 14,000 cabin owners

who have U.S. Forest Service special-use permits allowing recreation residences on the National Forests, all of

whom have a vital interest in this legislation.

Over the last several years, long-time 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, many of which are excessive, above market, and unfair. These cabin

owners are being hit with significant annual fee increases due to the fatally flawed Cabin User Fee Fairness Act

of 2000 (CUFFA). Many are now seeing their fees increase two- or three-fold or even more. Some cabin

owners have indicated they will have to abandon cabins that have been in their families for generations. The

very existence of this middle class recreation program is now threatened by onerous fee increases never

envisioned by Congress when it passed CUFFA in 2000.

The vast majority of cabin owners strongly support the Cabin Fee Act (CFA) as introduced. This bill has been

thoroughly vetted by cabin owners, the U.S. Forest Service, this Committee, and many members of Congress

over the last several years. It was substantially shaped by this Committee’s work in 2012, resulting in several

compromises acknowledged and accepted by the cabin owners.

Time is of the essence

Large 2013 fee increases have already caused many cabin owners to seek desperate measures. A few have

sold to more affluent buyers willing and able to pay high fees. Others are unable to sell because all

marketability is destroyed because no potential buyer will pay such high fees. Still others, having no other

options, are simply not paying the current fee, hoping that the CFA passes before the U.S. Forest Service takes

steps to terminate their permits and force the removal of their cabins. Please see the attached examples from

across the country of the critical situation many cabin owners are facing today. Cabin owners urge passage of

the CFA this year, before another round of sharply escalating fees are billed in January 2014.

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Problems with CUFFA

Since the passage of the Organic Act in 1915, the Recreation Residence Program has been a longstanding valid

use of National Forest System lands, but is now being threatened by the fee-setting process established by

CUFFA. (Note: We will refer to the more commonly used terms “cabin program” and “cabin owners” instead

of the more technically correct “Recreation Residence Program” and “recreation residence permit holder”).

The current use of fee simple land appraisals to set fees, as mandated by CUFFA, fails to determine actual

market value because the highly restricted nature of the permitted use is not valued in the CUFFA appraisal

process. Also, both location and the limited cabin structure influence market value and sale prices.

Interdependent equity interests where the permittee owns the cabin while the government owns the land are

subjective and difficult to separate. The lack of private recreation land suitable for appraisal comparisons also

contributes to very inconsistent appraisal results, sometimes resulting in permit fees which are well above

market value, while in other cases, setting permit fees potentially below market value. The inconsistent

appraisal results are exacerbated by the use of dozens of contract appraisers whose work is reviewed by up to

a dozen different U.S. Forest Service staff review appraisers from across the country. In addition, the 5% rate

specified by CUFFA was intended to represent a fair return rate. While cabin owners respect the

government’s need for a fair return for the use of the land, the arbitrary 5% rate far exceeds other market

rates of return such as 10-year U.S. Treasury rates, which are currently half the CUFFA rate.

NFH survey data indicate that almost 35% of cabin owners will reach their fee affordability breakpoint in the

current CUFFA appraisal cycle over the next few years. These cabin owners will attempt to sell their cabins

when fees reach a level which is beyond what the cabin owner can afford, or is willing to pay for the benefit

received. Some of the cabin owners may be able to sell their cabin to people of greater means, while others

won’t be able to sell their cabin at any price. When these folks cannot sell, we estimate 10-15% of cabins

(upwards of 2,000) will have to be torn down and removed at the owner’s expense. Under CUFFA, U.S.

Treasury revenue will decline approximately 20-30% from the total potential fee revenue since it will be the

highest permit fees that are lost, not the cabins with average fees. In addition to Federal Government fee

revenue loss, local governments and communities will also suffer tax revenue loss, loss of tourism dollars, and

other related economic benefits derived from cabin owners. Cabin losses will also reduce volunteer labor,

including substantial involvement in youth programs and first responder services, forest stewardship, and

infrastructure support provided by cabin owners.

Support for the Cabin Fee Act

The CFA will reform, simplify and improve the fee-setting process. It will encourage beneficial partnerships

and overall better relationships between the U.S. Forest Service and cabin owners and it will reduce agency

administrative workload and expenses. The CFA 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. They often provide and pay for utility

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infrastructure including power, water systems, septic and sewer systems that become attached to the land

and benefit all users of the National Forests. Cabin owners support and participate in volunteer fire

departments and first responder services for the public in cooperation with federal and state authorities.

Cabins are used to provide retreats for youngsters and youth groups who often live far from the forest. Please

see The Public Benefits of the Recreation Residence Program for a summary of salient benefits of the cabin

program.

Permit Fees: This Act establishes an affordable Permit Fee, indexed annually, that provides predictable fee

increases, while helping to maintain cabin value and 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 Permit Fees under the CFA will range from $500 to $5,500 per year. The lowest

tier of $500 is sufficient to cover the estimated cost to administer this program, while the highest tier of

$5,500 is supported by what the market will bear for premium cabin locations. The Permit Fee range was

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 eleven times the lowest fee. This

contrasts with fees under CUFFA where the highest fees are more than 100 times greater than the lowest fees.

A new Transfer Fee is a $1,200 additional fee which is collected when a cabin changes ownership and a permit

is issued to the new owner. Implementation of this new fee is an effort by cabin owners to help mitigate the

administrative cost to the U.S. Forest Service when cabins are bought and sold. Cabin marketability is not

encumbered because cabin owners will have full knowledge of the indexed annual Permit Fee and both a

seller and buyer can factor the Transfer Fee into their negotiations at the time of sale.

Fee Increases: Under the CFA, Permit Fees are adjusted annually by a rolling average of the IPD-GDP index.

This broadly-used Department of Commerce index, which is also used by CUFFA, provides for a reasonable,

straightforward method for increasing fees annually, while ensuring that permit fees keep pace with the

market. IPD-GDP rates of change, measured over several decades, compare similarly to real estate valuations

reflected in several national real estate indices. In addition, the CFA calls for the U.S. Forest Service to review

permit fees ten years after enactment and report to Congress any recommendation for changes to ensure fees

maintain a fair return for the use of the land for recreation residence purposes. Cabin owners support this

review approach that we understand closely follows another special-uses fee review provision under the

National Forest Ski Area Permit Act of 1986.

Market Review: The CFA fee structure compares favorably to the broader market of similar public and private

cabin lease programs. A comprehensive market study conducted for the NFH examined the market for

recreation cabin programs similar to the Forest Service Recreation Residence Program. Most of the 11,000

cabins reviewed by the study were located on state and local public lands, which validates the use of public

forest lands for recreation residence purposes. While fees vary by location, permit, and lease term

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considerations, the average annual fee of approximately $1,000 was less than half the average fee of $2,100

under the Cabin Fee Act. We offer this as clear evidence that the proposed CFA fee structure provides a more

than fair return to the U.S. Government and is supported by sound market principles.

Revenue Neutral: Based on the most recent information provided to the Congressional Budget Office (CBO)

by the U.S. Forest Service, we believe the CBO will find that CFA fee revenue will equal CUFFA fee revenue

over a 10-year period (2014-2023). Under the CFA, total fee revenue is projected to be approximately $29M

when fully implemented, more than twice the $14M fee revenue collected as recently as 2008 from this

program. In addition, elimination of the appraisal process under CUFFA will save the agency significant direct

and indirect costs annually, allowing these resources to be put to better use by the Forest Service. The

complexity and expense of the appraisal process and administrative appeal processes will be replaced with a

cost effective fee system and greatly simplified program administration.

Fee Retention: Cabin owners strongly support the CFA’s provision for fee retention by the U.S. Forest Service

beginning with the eleventh year of the Act. Allowing the Forest Service to retain fees from this program will

provide a stable revenue stream for administering recreation programs and strengthen the Forest

Service/cabin owner partnership over the long term. Cabin owner support for this provision aligns with

support for the Fee Review provision as introduced. Cabin owners would strongly object to fee retention if

the Forest Service was allowed unilaterally to change future permit fees, given the obvious conflict of interest

this would establish.

Cabin Retention: With predictable and affordable fees under the Cabin Fee Act, we expect all 14,000 current

permits to remain active, keeping the Forest Service Recreation Residence Program within reach of the typical

American family. By contrast, while CUFFA is expected to provide similar total revenue over time, we project

that 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 several years, 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 and producing less revenue than the

proposed CFA fee system over a longer period of time.

Simplicity: Significant simplicity is a great strength of the CFA. The simple and straightforward fee structure

provides long-term predictability and affordability for the cabin program, as well as significant administrative

time and cost savings to the Forest Service. These cost savings will allow for the redeployment of Forest

Service resources away from managing appraisals, re-appraisals and permit fee appeals to 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, and the American taxpayer.

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Cabin owners support the Cabin Fee Act as introduced because it ensures the long-term viability of the Recreation Residence Program and produces cabin permit fees that: 1) Are affordable as determined by the local cabin market;

2) Are simple, understandable and predictable;

3) Are revenue neutral, maintaining current projected revenues and fair return to the U.S. taxpayer;

4) Impose fees commensurate with actual benefits received;

5) Maintain the marketability of cabins.

Summary and Conclusions

We appreciate the opportunity to present this statement on behalf of the National Forest Homeowners, the

C2 Cabin Coalition and nearly 14,000 cabin owners throughout the nation. We believe the cabin program is

not only an invaluable source of multi-generational family outdoor recreation but that it makes a significant

contribution to the health of the National Forests and the economic vitality of local gateway communities.

Unfortunately, as a result of the appraisal-based fee system imposed by CUFFA, many cabin owners are facing

a dramatic escalation in their fees and this historic program is threatened and its many contributions are in

jeopardy.

After three years of protection by Congressional and Forest Service suspension of sharp fee increases, 2013

permit fees have increased dramatically and are beyond many cabin owners’ ability to pay. Formal appeals

and challenges are occurring in large numbers. Some cabin owners stand to lose their cabins--and the Forest

Service to lose some of this important constituency-- unless CFA is passed in 2013.

We ask for your support to enact into law the Cabin Fee Act of 2013 (S.1341) this year!

Thank You,

National Forest Homeowners

Cabin Coalition 2

For more information, please contact:

Aubrey C. King, NFH Washington Representative

11914 Grason Lane

Bowie, MD 20715-4012

O 301.464.8060

F 301.464.5232

C 202.251.6845

aubking@aol.com

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The Impact of CUFFA Fees & Comments from Cabin Owners

I. Lake Owen, Lovers Bay Tract, Chequamegon-Nicolet National Forest, Wisconsin

The Lake Owen Recreation Residence tract consists of 11 cabins, the only USDA Forest Service cabin tract in the state of

Wisconsin. No tract association exists. The stark reality of $16,000 annual CUFFA fees encouraged the group to band

together to address fees. The cabin owners were told by private fee appraisers, who prepare appraisal reports using the

Uniform Appraisal Standards for Federal Land Acquisitions, that a second appraisal would not produce lower values.

They formally appealed twice and pleaded with their local forest district, but have not found relief. Local real estate

agents refuse to list their properties because all potential buyers walk away upon learning of the high fees which are

demonstrated on the fee graph below. The following are direct quotes from these folks.

“It’s important that people know that these are not luxury estates. These are very modest dwellings, often little

more than glorified hunting shacks. Yet we are expected to pay fees that far exceed the property tax bills of

multi-million dollar estates.”

“We have continued to pay our fees with hope that CFA would pass and we could hang on to our cabin or at least

recoup some of our investment. This year's last two installment payments will be going on credit cards as we can

no longer afford to pay, and it's the only way we can fulfill our obligation.”

“We have been trying to sell the cabin, but area realtors refuse to list it due to the unreasonable and

unpredictable fee. We are well into our 80s and we have had to borrow money this year in order to pay the cabin

fees. If the Cabin Fee Act does not pass this year, we will proceed to demolish the cabin as soon as possible.”

“…seeing our snug little cabin crushed by a backhoe, loaded into trucks, and sent to a landfill is unthinkable and

will cause us irreparable harm. We’re tired, sad, and disappointed by the way our government has abandoned

us, after we’ve repeatedly asked for relief from the skyrocketing permit fees.”

Lake Owen Cabin, 2 rooms, 720 sf, $16,000 Fee

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Seeley Lake Cabin with $19,000 Fee

II. Seeley Lake, Lolo National Forest, Montana

The Seeley Lake District Recreation Residence tract consists of 33

cabins. Fourteen are set along the north end of the lake and 14 are

along the south end of the lake. Five additional cabins are set back

from the lake. The 2014 fee for 28 cabins will be $19,000 and

$18,500 under CUFFA. Year around access is not possible. A few

comments by cabin owners and local real estate agent follow:

“Never would I have imagined … such a huge increase and that the people who purchased these cabins would

now have to lose them because they cannot pay the lease. Cabins up for sale are not selling… due to the price of

leases. People with the money look at the price of the leases and say, I’ll buy deeded land instead.” Elinor

Williamson, Realtor, Clearwater Montana Properties, Inc., Seeley, MT

“As a Montana educator, I will not be able to afford the projected fee without the passing of the Cabin Fee Act. My cabin that embraces our family heritage will need to be put on the market. However, who would buy a very small 88- year old cabin with crippling restrictions?” “My cabin is a one room log structure built in 1930. We do not have a bathroom or indoor plumbing. There is no foundation so the logs sit on the forest floor. We have an outhouse and a shed. The cabin is very rustic and extremely small. This year, I paid $13,745.63. I cannot afford to keep the cabin. I have sold stock to pay for the lease. This year, I sold my home in Helena and used equity to pay the amount. This is a terrible position to be in: I cannot pay the lease, I cannot sell the cabin.”

“Our family has owned this permit since 1998 and we have seen our fee go from $3500.00 per year to $13,700.00 in 2013, which we had to pay in July. Our January 2014 bill is expected to be $19,600.00 if we do not see the passage and implementation of CFA S.1341. We cannot pay $ 33,300.00 over this 6 month period!” “Our cabin is old and small with plumbing only in the summer months and we cannot make changes or

improvements due to Forest Service restrictions. I can see our cabin and others on Seeley Lake abandoned

because of unaffordable permit fees and the near impossibility of selling them.”

III. Turpin Meadow, Bridger-Teton National Forest, Wyoming

The Turpin Meadow Recreation Residence tract consists of 19 cabins. Eight have views of the Teton Range 50 miles to

the west. Their 2014 fee will be $21,750 under CUFFA. Eleven cabins circle the meadow and have a view of the meadow

(below). Their 2014 fee will be $13,750. There is no lake, river or stream near the cabin tract. Residents simply enjoy

the rural setting. Comments by cabin owners:

“The decision to implement CUFFA has reduced the value of my cabin. If I tried to sell, there would be no market

for it. In addition to the significant loss of invested capital, the annual fee is onerous to those of us living on a

fixed and limited income. All of this because the (CUFFA) land appraisal is multiple times the fair market value.”

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“My bill went from $3336.92 in 2006 to $9,389.23 this year and will be $13,500 in 2014. A friend with a house

and garage on 3.5 acres of Forest inholding land four miles west of us pays $3500 in yearly taxes. Compare this

to my yearly bill of over $14,000 for permit fees and taxes and you realize what a tight situation I am in. The

intent of CUFFA was to produce a fair fee but this is clearly not the case.”

Meadow View - $13,500 Fee

IV. Black Canyon, Bridger-Teton National Forest, Wyoming

The Black Canyon Recreation Residence tract consists of 4 cabins, located in a brushy second growth stand of trees

served by a deeply rutted mud two-track road. These cabins lack winter access, have no views, do not have water or

electricity and use outhouses for sanitation. They have tried and failed to sell their cabins at any price. A few have

prudently delayed any needed repairs, awaiting the passage of the CFA. The high fees, $23,500 annually, are due to

proximity to Wilson, Wyoming a bedroom community to Jackson Hole, where real estate prices are extraordinary.

240 SF Cabin - $23,500 Fee

The Public Benefitsof the Recreation Residence Program

In looking at the future of the Recreation Residence Program (14,000 cabins spread across 25 states), the broad economic impact and forest stewardship associated with these cabins is especially relevant. Sustaining and enhancing recreation opportunities for the public is a stated goal of the Forest Service. Since inception in 1915, the Cabin Program has fulfilled this goal by providing family-oriented recreation opportunities while generating revenue for the U.S. Treasury.

Over 5.1 million recreation visitor days typically occur each year on the small footprint of the Cabin Program (< .003 % of National Forests). Over 68% of the typical cabin visits include one or more kids. Educational and recreational activities for kids are often provided to all forest visitors. Expenditures by cabin owners and guests benefit, not only the federal government, but local and state governments and local businesses as well. In many forests, cabin communities support and provide services that enhance the public’s recreation experience as well as enhance the quality of life in rural communities.

Local economies receive over $110 million each year from the Cabin Program. Cabin owners purchase food, staples, improvement and repair items, participate in area recreational activities and frequent area restaurants. In addition, cabin owners donate funds to local churches, rescue services and volunteer their time as firemen, museum and kiosk docents, and more, in total injecting locally more than $7,600 annually per cabin. The very existence of the local Lodge, grocery store or restaurant often depends on cabin owners and their visitors for support. Surprisingly, even emergency facilities and utilities are provided by some cabin communities to the public, Forest Service and others, which otherwise would be difficult to maintain or support in these rural communities.

Annual government revenues of about $34 million are generated nationally. Property taxes, special use permit fees and other access fees total almost $2,400 annually for the average cabin. Plus, direct business expenditures for utilities and various insurances cost on average about $1,600 each year. This amounts to an additional $24M each year, much of which benefits rural businesses and utility providers dependent on cabin business.

Forest stewardship, as a family value, is nurtured by the cabin program where the average cabin is host to over three generations. Cabin owners, their families and guests are frequent participants in activities such as mitigating invasive plant species, litter removal, recycling, improving water systems and assisting in fire fuels reduction. The cabin community volunteers an estimated 192,975 hours annually (valued at $4.2M) for trail maintenance, forest restoration, fire and rescue and other services to the forest and its visitors.

Cabin owners are valuable resources. Secretary of Agriculture, Mr. Tom Vilsack, has stated, “It is essential that we reconnect Americans across the nation with the natural resources and landscapes that sustain us.” Cabin owners, their families and friends are already connected with Mr. Vilsack’s vision. They continue to play a vital role in the health of our rural communities and our National Forests, furthering the goals of the Forest Service and enhancing public services and recreation experiences where cabin communities exist.