DNRC Lease Lot Survey Conducted by Lessees As of 10pm, September 17, 2009

2 Scope of This Presentation During August and September of 2009, the DNRC State Trust Land Lessees undertook their own internal survey. This survey was distributed by , through the group’s own web site and through personal contacts. The main scope of the survey was to ascertain lessees attitudes about doubling lease rates; their intention concerning their lease should lease rates double; any marketing attempts by the lessees; what lessees consider to be a fair lease rate for their lot; whether they might have an interest in purchasing their lot from the state, should such a possibility exist; and the lessees worries and hopes for their leases.

3 State Leaseholder Poll )Area Lot Located __________________________ 2)Lot No._____________ 3)Year Lease Purchased___________ 4)For How Much _________________ 5)Current Annual Lease Payment ____________ 6)Full Lease Payment at End of Phase in ________________ 7)2003 Appraised Value _________________ 8)2009 Appraised Value (if known) ________________________ 9)Waterfront Y/N ______10)Taxed Assessed value of improvements ________________ 11)How do you use your lot? Seasonal ____or year-round ____ 12)History of Sales Attempt: a)Any Attempts to Sell? Y/N ________ If not skip to 13 b)How many months has the lot been on the market?________ c)Original asking price ______________ d)Any Reductions in Price ? Y/N ______ e)Current Asking Price ______________ f)How many interested Parties _______ g)How Many Offers Received __________ h)Reasons Parties Decided not to Buy (if known) ____________________________________________________________________ i)If currently selling what is the minimum value of your improvements you would accept in order to dispose of your lease? 25%______ 50%______ 75% ______100% ____ More than 100% _______ 13)What will you do if your current lease fee doubles? Pay and Stay_______ Try to Sell ________ Try to Sell for _______ Months, then Abandon the Lease _______ Abandon the Lease and Remove Improvements _______ 14)In your mind, what is a fair annual lease for your lot? $1,000 ___$5,000 ___$9,000 ___ $2,000 ___$6,000 ___$10,000 ___ $3,000 ___$7,000 ___Greater than $10,000 ___ $4,000 ___$8,000 ______% of Value ____ 15)Would you be interested in purchasing your lot from the state? Y/N _____ 16)What worries you the most about leasing DNRC land? 17)What would you like to see happen to your lease?

4 What Action Lessees Will Take if Their Lease Fee Doubles Total Abandon= 64% Abandon Stay Sell Try to sell, then abandon

Dollars Lost if Leases are Abandoned 64% of lessees state they will abandon within 24 months. Extrapolated to all 764 active leases, this represents an Annual Loss of $3,204,110

6 11 Attempts to Sell, Months on the Market 11 of 86 respondents are currently trying to sell their leased properties. The average = 15 months

7 11 Attempts to Sell, Original Asking Price and Current Asking Price Percentage Decrease in Asking Price: Max= 40%, Min= 0, Avg= 18%

8 11 Attempts to Sell, Number of Interested Parties and Number of Offers Interested Parties Max=10, Avg=4.5 Offers=0

9 Reasons Stated by Interested Parties for NOT Making an Offer to Purchase a Lease Lot -Instability of lease fees -Not knowing what the next lease fees will look like -Major concerns about the lease fees -Lease price too high -State leased property -No ability to attain financing in current lease structure

10 Unleased Lots on Roger’s Lake The DNRC currently lists 5 undeveloped state trust land lots for bid. They are described as follows: Lot acres, 1,209’ lake front Lot acres, 584’ lake frontage Lot 3- 5 acres, 403’ lake frontage Lot 4- 5 acres, 350’ lake frontage Lot 5- 5 acres, 797’ lake frontage Using the rate of $1,600/ft of lake frontage for Roger’s Lake quoted by Michael Forester of the Kalispell DOR for the 2009 appraisal cycle, then: Lot 1 value = $1,934,400 Lot 2 value = $934,400 Lot 3 value = $644,800 Lot 4 value = $560,000 Lot 5 value = $1,275,200 _____________________ Total $5,348,800 Applying a 5% rental rate then the annual lease payment for each lot would be: Lot 1 $96,720 Lot 2 $46,720 Lot 3 $32,240 Lot 4 $28,000 Lot 5 $ 63,760 ____________ Total $267,440 in annual lease revenue to the State Trust if the DNRC were successful in marketing these lease lots at the current lease and appraisal structure. However, these lots have been withdrawn from the public bid process due to lack of interest. One could conclude, that due to the current lease and appraisal structure, the state is missing out on $267,440 in potential annual income on from these five lots on Rogers Lake alone.

11 Rent Considered Fair by the Lessees in 2009 Dollars Rent considered fair by lessees: Avg.=$3,798

12 Lessees Who Consider a Fair Lease Rate to be Less, Same, or More Than Their Current Lease More Same Less

13 Lessees Interested in Buying Their Lot No Yes Yes =93% No=7%

14 Comments by Lessees What worries you the most about leasing DNRC land ?

15 Comments by Lessees What would you like to see happen to your lease?