Recreation Residence Program Cabin Fee Act of 2012

1. Recreation Residence ProgramCabin Fee Act of 2012 National Forest Homeowners Convention Vancouver, WA April 14, 2012

2. 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!

3. 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

4. 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.

5. CUFFA Fees from Completed Appraisalsas of November, 2011 11% < $1000. 17% > $4000. 4% > $7000 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!

6. Five Guiding Principles For 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

7. How are CFA Fees Determined? • Annual User Fee • Transfer Fee upon sale of Cabin • What will be my fee? • How does the transition work? • What should I expect?

8. 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 fee implementation, possibly 2015.

9. Step #2 Appraisal Normalization Normalization 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.

10. Appraisal Normalization: How is it calculated? • Index factor determined by appraisal date (quarter/year). • Divide appraised value by factor. • 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.

11. 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.

12. 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

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

14. 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.

15. 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

16. 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

17. 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

18. 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

19. 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)

20. 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)

21. Fee Range = Balance of Principles Recreation Use Permit Location Influence • 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 Experience • Seasonal Access • Proximity to Population Centers • Proximity to Recreation opportunities • Hiking, Skiing, Boating • Water & View Influence • Varies by Location Fee Range $500 - $5,000 Highest 10X Lowest • 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

22. CFA Fee Tier % Allocation Divide CUFFA fees into 10 groups in $500 increments (+/- around tiers)

23. CFA Fee Tier % Allocation Divide CUFFA fees into 10 groups in $500 increments (+/- around tiers) Determine % of permits for each CFA tier to follow CUFFA, maintaining similar proportion of lower, medium, and higher fees Shift % allocations downward slightly to project final CUFFA appraisals and provide for more rounding down than up for all fee tiers. No “subsidizing” of fees by one cabin owner group for another.

24. 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) --------------------------------------------------------------------------------------------------------

25. Benefitsof 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.

26. THANK YOU! For your feedback, legislative contacts, and financial support. Questions?