Recreation Residence ProgramCabin Fee Act of 2012

National Forest Homeowners Convention

Vancouver, WA

April 14, 2012

2012 must be the Year!

Cabin Coalition 2 has been working since Oct. 2007 Great success in 2010, but the 111th Congress ended

with no action. Bills re-introduced in 2011 with 112th Congress. The clock is ticking. This must be the year! Cabin

owner involvement and financial support is essential!

Today’s Topics

The Fee Problem – Cabins in Crisis!

The Cabin Fee Act – How are Fees Determined?

The House CFA Bill (H.R.3397 / H.R.4019)

The Senate CFA Bill (S.1906)

Reconciling the two Bills

Questions & Answers

The Problem with CUFFA Fees Appraisals have proven to be highly

inconsistent and often result in extreme fees• Fees are based on land value, not the value of the highly

restricted land use.

• Some fees are too low, less than the cost to administer the program.

• Some fees are too high, beyond a typical cabin owner’s ability to pay and often so high that marketability is lost when cabins can’t sell.

• The 10-year appraisal cycle places all fees under a cloud of uncertainty, even if your current fee is somewhat reasonable.

CUFFA Fees from Completed Appraisals

as of November, 2011

We estimate 10-15% of CUFFA fees will be beyond a cabin owners ability or willingness to pay and those cabins are at risk of loss…..upwards of 2,000 cabins!

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Permit Fee Range

11% < $1000.17% > $4000. 4% > $7000

Five Guiding PrinciplesFor a new fee system that address overall Program Viability

Affordable now and in the future (Fee Certainty)

Simple, Understandable and Predictable

Revenue Neutral

Address ‘windfall profit’ cabin sale situations

Maintain Cabin Value and Marketability

How are CFA Fees Determined?

1) Annual User Fee

2) Transfer Fee upon sale of Cabin

What will be my fee? How does the transition work?

What should I expect?

Step #1: The ‘Transition Period’, complete CUFFA appraisals!

All appraisals under CUFFA must be completed.

• Including second appraisals and potential appeals.

• 82% of appraisals completed to date (FS reported).

• Region 5 (California) projected to complete in 2012, but

• Second appraisals will extend into 2013.

2014 is the earliest possible year of full CFA feeimplementation, possibly 2015.

Step #2 Appraisal NormalizationNormalization corrects for value differences due to the wild fluctuations during the long (6-7 years) delayed appraisal process under CUFFA. (2007 to 2012)

Determine year & quarter of your appraisal, according to the appraisal ‘date of value’.

Divide appraised value by the table factor for your year and quarter or ‘date of value’. This is your normalized appraisal value.

The index factors (chart) will be updated with finalization of all appraisal data.

Appraisal Normalization: How is it calculated?

1. Index factor determined by appraisal date (quarter/year).

2. Divide appraised value by factor.3. Result is then rank ordered among all

14,200 cabin appraisals before assignment to fee tier.

National Association of Home Builders (NAHB) / Wells Fargo

Housing Opportunity Index.

0.90

1.00

1.10

1.20

1.30

1.40

1.50

HOI Index Factor

Step # 3: Rank Ordering

All 14,200 ‘normalized’ cabin appraisals are ranked from lowest value to highest value.

Your CUFFA appraisal does not determine your fee directly, it determines where in the rank order you will be placed.

Second appraisals may be a good decision because it could change your rank order position.

Step #4: Assignment to Fee Tiers

For example, a normalized appraisal value of $50,000 would currently rank at 71.1% of all appraisals nationally (71% have lower values)

This permit would be placed in Tier 5 above = $2,500 annual fee

% of User User FeeTier Permits Fee Revenue1 8% $500 $568,0002 16% $1,000 $2,272,0003 20% $1,500 $4,260,0004 20% $2,000 $5,680,0005 12% $2,500 $4,260,0006 8% $3,000 $3,408,0007 6% $3,500 $2,982,0008 6% $4,000 $3,408,0009 4% $4,500 $2,556,000

Total 100% $2,070 $29,394,000

What about the Transfer Fee, how are they determined?

A Transfer Fee is paid when a cabin is sold and a new permit is issued. It is intended to address the ‘wind fall profit’ issue by assessing an additional fee for cabins sold at higher values.

1. For all cabin sales, including cabins gifted or inherited, a transfer fee of $1,000 is paid.

2. If a cabin sells for more than $250,000, but less than $500,000, an additional 5% of the sales amount over $250,000 is paid.

3. If a cabin sells for more than $500,000, an additional fee of $12,500 + 10% of the sales amount over $500,000 is paid.

Fees during the Transition

During the Transition Period cabin owners continue to pay fees based on the fee structure determined under CUFFA, including fee increases. The CFA transition language provides the following protection…...

No fee can be higher than the highest CFA tier (i.e. $4,500) No fee can increase more than 25% in any given year until

one reaches their fully implemented CFA determined fee Inflation indexes will be applied (IPD-GDP)

We will monitor this new provision as it progresses through committees in the House and the Senate.

House CFA Bill (H.R. 3397 / H.R. 4019)

Introduced by Rep. Doc Hastings (R-WA) Nov, 2011 Successful hearing before the NR subcommittee on

National Park, Forests and Public Lands H.R. 3397 passed out of committee with unanimous

consent Formal CBO review shows CFA fees will be $25M

less than CUFFA over 10 year period CFA attached to H.R. 4019 Secure Rural Schools bill

Feb, 2012 Awaiting further action on H.R. 4019 by the House

House H.R. 4019 Bill

FEE MODEL SUMMARY

$30M Fee Model 9 Fee Tiers $500 - $4,500 Range $1,000 Transfer Fee + 5-10%

of Cabin Sale ‘Surcharge’ CBO est. $2.5M less than

annual CUFFA Revenue 25% Annual Fee Cap Appeal Rights with Judicial

Review

% of User User FeeTier Permits Fee Revenue1 8% $500 $568,0002 16% $1,000 $2,272,0003 20% $1,500 $4,260,0004 20% $2,000 $5,680,0005 12% $2,500 $4,260,0006 8% $3,000 $3,408,0007 6% $3,500 $2,982,0008 6% $4,000 $3,408,0009 4% $4,500 $2,556,000

Total 100% $2,070 $29,394,000Transfer Fee Revenue $600,000Total Program Revenue $29,994,000

Senate CFA Bill (S.1906)

Introduced by Sen. Jon Tester (D-MT) Nov, 2011 Successful hearing before the Energy & Natural

Resources subcommittee on Public Lands & Forests Forest Service and Cabin Owner testimony included

request for several changes to the bill** Cabin Owner requested changes submitted to ENR

committee staff for consideration Awaiting “mark up” of the bill and ENR committee

action by the Senate

Senate CFA Bill NFH/C2 - Forest Service Collaboration

Positive meeting with USFS Chief Tidwell Nov, 2011

Meeting with Forest Service Feb, 2012 to discuss outstanding USFS concerns Transfer fee tied to cabin sale price Higher fee tier(s) to “round out” market value fees Use of NAHB/Wells Fargo Index Appeal and Judicial Review

Cabin Owners proposed several changes to satisfy USFS concerns and secure greater support for CFA

Proposed CFA Changes NFH/C2 & USFS agree to support

Remove transfer fee 5-10% surcharge, while retaining $1,000 transfer fee on cabin sales

Add $5,000 fee tier and reallocate fee tier % to meet $32.5M annual revenues (per CBO est.)

Retain use of NAHB/Wells Fargo index (normalization only)

Appeal & Judicial Review

Remove right to appeal transfer fee

Specify US District Court of cabin location as single venue for any Judicial action

Several minor S.1906 language changes to further clarify bill provisions (i.e. 25% fee cap)

Senate S.1906 Bill(with proposed changes)

FEE MODEL SUMMARY

$32.5M Fee Model 10 Fee Tiers $500 - $5,000 Range $1,000 Transfer Fee Est. CFA = CUFFA Revenue 25% Annual Fee Cap Appeal Rights with Judicial

Review (revised)

Target User User FeeTier Tier Fee Revenue1 5% $500 $355,0002 12% $1,000 $1,704,0003 22% $1,500 $4,686,0004 22% $2,000 $6,248,0005 10% $2,500 $3,550,0006 9% $3,000 $3,834,0007 7% $3,500 $3,479,0008 5% $4,000 $2,840,0009 5% $4,500 $3,195,000

10 3% $5,000 $2,130,000Total 100% $2,255 $32,021,000Transfer Fee Revenue $500,000Total Program Revenue $32,521,000

Fee Range = Balance of Principles

Fee Range

$500 - $5,000

Highest 10X Lowest

License to place cabin on USFS land

Limited to Recreation Use

Non-exclusive Land Use

Restricted Structure, Size, Materials, Color

Site Maintenance

Subject to termination

Same for All

Recreation Use Permit Location Influence

Recreation Use Experience

Seasonal Access

Proximity to Population Centers

Proximity to Recreation opportunities

Hiking, Skiing, Boating

Water & View Influence

Varies by Location

The minimum fee of $500 covers the cost of program administration

A fee of $5,000 is the maximum we believe the market is willing to pay

CFA Fee Tier % Allocation

1) Divide CUFFA fees into 10 groups in $500 increments (+/- around tiers)

CUFFA No. FeeLevel Fee Range Permits Range CFA Tier

1 < $750 547 4.7% $500 5.0%2 $750-$1,250 1,519 13.0% $1,000 12.0%3 $1,250-$1,750 2,224 19.1% 36.8% Lower $1,500 22.0% 39.0%4 $1,750-$2,250 2,135 18.3% $2,000 22.0%5 $2,250-$2,750 1,707 14.6% $2,500 10.0%6 $2,750-$3,250 893 7.7% 40.6% Medium $3,000 9.0% 41.0%7 $3,250-$3,750 458 3.9% $3,500 7.0%8 $3,750-$4,250 383 3.3% $4,000 5.0%9 $4,250-$4,750 417 4.7% $4,500 5.0%10 > $4,750 1,384 10.8% 22.6% Higher $5,000 3.0% 20.0%

11,667 100.0% 100.0%

% of Total Proposed S.1906CUFFA Permits CFA Permit Fees

CFA Fee Tier % Allocation

1) Divide CUFFA fees into 10 groups in $500 increments (+/- around tiers)

2) Determine % of permits for each CFA tier to follow CUFFA, maintaining similar proportion of lower, medium, and higher fees

3) Shift % allocations downward slightly to project final CUFFA appraisals and provide for more rounding down than up for all fee tiers.

4) No “subsidizing” of fees by one cabin owner group for another.

CUFFA No. FeeLevel Fee Range Permits Range CFA Tier

1 < $750 547 4.7% $500 5.0%2 $750-$1,250 1,519 13.0% $1,000 12.0%3 $1,250-$1,750 2,224 19.1% 36.8% Lower $1,500 22.0% 39.0%4 $1,750-$2,250 2,135 18.3% $2,000 22.0%5 $2,250-$2,750 1,707 14.6% $2,500 10.0%6 $2,750-$3,250 893 7.7% 40.6% Medium $3,000 9.0% 41.0%7 $3,250-$3,750 458 3.9% $3,500 7.0%8 $3,750-$4,250 383 3.3% $4,000 5.0%9 $4,250-$4,750 417 4.7% $4,500 5.0%10 > $4,750 1,384 10.8% 22.6% Higher $5,000 3.0% 20.0%

11,667 100.0% 100.0%

% of Total Proposed S.1906CUFFA Permits CFA Permit Fees

House & Senate BillsReconciliation

HOUSE H.R.4019 SENATE S.1906

$30M Fee Model Seeking offset to solve

$2.5M annual deficit 9 Fee Tiers $500 - $4,500 Range Transition 25% Fee Cap $1,000 Transfer Fee + 5-10% TF Surcharge Judicial Review dual

venue (home or cabin)

$32.5M Fee Model Revenue Neutral

10 Fee Tiers $500 - $5,000 Range Transition 25% Fee Cap $1,000 Transfer Fee No TF Surcharge Judicial Review single

venue (cabin location)

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Benefits of the CFA

For cabin owners:

• Stability and predictability of future fees.• Eliminates the risk of dramatic fee increases making cabins

unaffordable & unmarketable.• Continuation of the Cabin Program for the long-term as a

family-based recreation program for the middle class.

For the Forest Service:

• A far simpler and less costly program to administer.• A fair and reasonable return for the tax payer.• Continuation of this USFS recreation program with a

reliable and long term source of revenue for the US Treasury.

THANK YOU!

For your feedback, legislative contacts, and financial support.

Questions?