It appears that someone in Congress -- probably multiple someones -- feels that we're not giving away the Commons fast enough, and that the federal government ought to rely on other kinds of income rather than collecting the fair market rent on the land on which individually owned cottages sit within Forest Service lands, those rents ought to be reduced! They've asked the CBO to estimate the costs of this gifting.
A bit of calculating reveals that the owners of the 14,000 cottages are paying, on average, $2,142 in land rent annually, at 5% on older valuations of the land, suggesting that the average lot is currently valued at about $43,000 for land rent purposes. Interestingly, these are apparently longtime owners; average turnover is 400 per year, or 2.9%.
When we-the-people lower the rent below market value, what happens to the selling price of the homes? The selling prices go up. In other words, the leaseholders who want to sell can charge buyers more for the house. Aren't we nice to provide those homesellers such a gift?
Not only that, our gift is to be retroactive to the beginning of 2014, it appears!
They propose to cap the fees at $5,600, no matter what the updated valuation of the land might be. That is, no matter what the real value of the cabin's site might be, for land rent purposes, the impolite fiction would be that it is worth no more than $112,000. No matter what the view is, what the location is, how good the infrastructure is, what services the federal employees provide to keep the lot accessible. This sounds a bit like California's Proposition 13, which detaches property taxes from current valuations.
More typically, if a tenant gives up a lease, they are expected to remove their cottage from the lot and leave it clean for the next tenant. The landlord -- we the people -- shouldn't have to deal with abandoned cottages.
Below is a copy-and-paste of the PDF at http://www.cbo.gov/sites/default/files/cbofiles/attachments/hr4873.pdf; I've not bothered with the formatting of the tables.
CONGRESSIONAL BUDGET OFFICE
September 12, 2014
Cabin Fee Act of 2014
As ordered reported by the House Committee on Natural Resources on June 19, 2014
H.R. 4873 would establish a new schedule for the fees paid to the federal government by individuals who own cabins located on Forest Service lands. The bill also would establish a fee that would be assessed on individuals who transfer ownership of their cabins. Based on information provided by the Forest Service, CBO estimates that enacting the legislation would increase net direct spending by $5 million over the 2015-2024 period; therefore, pay-as-you-go procedures apply. Enacting H.R. 4873 would not affect revenues.
H.R. 4873 contains no intergovernmental or private-sector mandates as defined in the Unfunded Mandates Reform Act (UMRA) and would not affect the budgets of state, local, or tribal governments.
ESTIMATED COST TO THE FEDERAL GOVERNMENT
The estimated budgetary impact of H.R. 4873 is shown in the following table. The costs of this legislation fall within budget function 300 (natural resources and environment). 2
By Fiscal Year, in Millions of Dollars
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
CHANGES IN DIRECT SPENDING
Reduction in Cabin Fees
Estimated Budget Authority a
6 2 * * * * * * * * 8 10
Estimated Outlays 6 2 * * * * * * * * 8 10
Cabin Transfer Fee
Estimated Budget Authority * * * -1 -1 -1 -1 -1 -1 -1 -2 -5
Estimated Outlays * * * -1 -1 -1 -1 -1 -1 -1 -2 -5
Estimated Budget Authority 6 2 * * * * * * * * 6 5
Estimated Outlays 6 2 * * * * * * * * 6 5
Notes: Amounts may not sum to totals because of rounding; * = between -$500,000 and $500,000.
a. Because the fees already paid by some cabin owners for 2014 would exceed the amounts that would be owed in that year under the bill, CBO expects that the Forest Service would provide refunds to those cabin owners in 2015.
BASIS OF ESTIMATE
For this estimate, CBO assumes that the legislation will be enacted in 2014.
CBO estimates that enacting H.R. 4873 would increase net direct spending by $5 million over the 2015-2024 period. Over that period, fees collected from cabin owners by the Forest Service would total $10 million less than what would be collected under current law (such losses would be reflected in the budget as an increase in direct spending). In addition, proceeds from the cabin transfer fee required under H.R. 4873 would increase receipts (thus reducing direct spending) by $5 million over that period.
Reduction in Cabin Fees
H.R. 4873 would establish a new schedule for fees assessed on cabins located on Forest Service lands. Under current law, owners of the roughly 14,000 affected cabins pay an annual fee to the federal government equal to 5 percent of the appraised value of the occupied land. Fee collections from those cabins totaled roughly $30 million in 2014 and CBO estimates that those collections will increase, under current law, to about $35 million by 2024. Collections will increase over that period as the agency completes appraisals of the affected Forest Service lands, implements new fees based on those appraisals, and annually adjusts fees on all cabins to account for inflation. 3
Because H.R. 4873 would cap annual cabin fees at $5,600 and prevent scheduled increases from being implemented as they would be under current law, CBO estimates that enacting the bill would lower annual receipts by an average of $150 per cabin over the 2015-2024 period. However, because of the reduction in fees CBO expects that fewer cabins would be abandoned under the bill than under current law, partially offsetting the reduction in the fee paid per cabin. On net, we estimate that enacting the new cabin fees required under H.R. 4873 would reduce offsetting receipts (and thus increase direct spending) by $10 million over the 2015-2024 period.
Cabin Transfer Fees
H.R. 4873 would require the Forest Service to collect a fee of $1,200 from cabin owners who transfer ownership of their cabins. That fee would be adjusted annually to account for inflation. CBO estimates that enacting this provision would increase offsetting receipts, which are treated as reductions in direct spending, by $5 million over the 2015-2024 period, based on information provided by the Forest Service indicating that about 400 permits will be issued to new owners each year.
The Statutory Pay-As-You-Go Act of 2010 establishes budget-reporting and enforcement procedures for legislation affecting direct spending or revenues. The net changes in outlays that are subject to those pay-as-you-go procedures are shown in the following table.
CBO Estimate of Pay-As-You-Go Effects for S. 1341 as ordered reported by the Senate Committee on Energy and Natural Resources on December 19, 2013
By Fiscal Year, in Millions of Dollars
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
NET INCREASE OR DECREASE (-) IN THE DEFICIT
Statutory Pay-As-You-Go Impact 0 6 2 0 0 0 0 0 0 0 0 6 5
INTERGOVERNMENTAL AND PRIVATE-SECTOR IMPACT
H.R. 4873 contains no intergovernmental or private-sector mandates as defined in UMRA and would not affect the budgets of state, local, or tribal governments. 4
PREVIOUS CBO ESTIMATES
On April 5, 2013, CBO transmitted a cost estimate for H.R. 1159, the Cabin Fee Act of 2013, as ordered reported by the House Committee on Natural Resources on March 20, 2013. H.R. 4873 would establish a higher cap on fees paid by each cabin owner, cap the amount that cabin fees could be increased each year through 2016, adjust the cabin transfer fee for inflation, and make the cabin transfer fee apply in all cases where ownership of a cabin is transferred.
On March 5, 2014, CBO transmitted a cost estimate for S. 1341, the Cabin Fee Act of 2013, as ordered reported by the Senate Committee on Energy and Natural Resources on December 19, 2013. H.R. 4873 would establish a higher cap on fees paid by each cabin owner and cap the amount that cabin fees could be increased each year through 2016.
Those differences are reflected in the cost estimates for H.R. 4873 and the two earlier bills. In addition, the cost estimate for H.R. 4873 takes into account new information provided by the Forest Service regarding the actual amount of fees charged, new appraisal amounts, and the progress of the current appraisal cycle.
ESTIMATE PREPARED BY:
Federal Costs: Jeff LaFave
Impact on State, Local, and Tribal Governments: Jon Sperl
Impact on the Private Sector: Amy Petz
ESTIMATE APPROVED BY:
Deputy Assistant Director for Budget Analysis