Doug Cossette was three months old the first time his parents drove him to Priest Lake, back in 1951. Sixteen years later, his father paid a Tonasket family about $100 for the lease on a lakeside lot near Eight Mile Island, land owned outright by the State of Idaho. The Cossettes built a cabin there in 1968, at 395 Eight Mile Road in Coolin, and for the next several decades it held birthdays, holidays, and generations of the same family's summers.
On August 23, 2025, that lease came up for public auction. A neighboring cabin owner named David Rubens won it, paying roughly $1.9 million for the land and another $300,000 for the cabin and its contents. By January 2026, demolition crews were tearing the structure down.
Nothing about that sale broke any rules. It followed them exactly. And those rules are the reason Priest Lake's waterfront prices don't behave the way waterfront prices behave almost anywhere else in Bonner County.
At Priest Lake, the number on the listing and the deed behind it can answer two entirely different questions. Knowing which one you're looking at matters more than frontage, square footage, or where the price sits against the county's median.
The Split Estate That Built Priest Lake
Since the early 1900s, roughly two-thirds of Priest Lake's shoreline hasn't been sold to homeowners at all. It has been leased. The Idaho Department of Lands holds title to the land under about 350 so-called cottage sites on the lake's east shore, land granted to the state at statehood and held in trust to fund public schools. On the west shore, the U.S. Forest Service issues a smaller number of permits that work the same way under federal rules. In both cases, the person living in the cabin owns the structure. The agency owns the ground.
That arrangement is called a split estate, and it produces a counterintuitive fact for anyone comparing listings by frontage alone. Leasehold lots on Priest Lake tend to run larger, often 100 to 150 feet of shoreline, while the deeded parcels making up the remaining third of the lake tend to run smaller, closer to 50 to 100 feet. A buyer who assumes more waterfront means a better deal will often find that the bigger lot is the one where the price is really pricing a house, not land.
How an $11,000 Lease Became a $76,800 Lease
State leasehold rent isn't fixed. It resets on a schedule tied to the appraised value of the land underneath it, and in a market where waterfront values have climbed for a decade, that schedule has turned once-modest payments into something closer to an underwriting problem.
Cossette's own lot traces the arc. Idaho appraised the .68-acre parcel at $417,000 in 2013, putting the annual lease near $16,680. By 2020, the same lot was reappraised at $880,000, pushing the lease to about $35,200 a year under the state's formula. The state's most recent appraisal, which values land at its highest and best use rather than the lower figure Bonner County uses for property tax purposes, put the land at $1.92 million. The first year of the lease that would have followed, for 2025, would have cost Cossette about $76,800.
He didn't renew.
"I could take three or four trips around the world for that kind of money," Cossette told The Spokesman-Review. "That's a ridiculous amount of money for a lease."
What Happens When the Lease Comes Due
Until 2012, a family that had held the same lot for decades had some protection if it came up for competitive bid. That year, the Idaho Supreme Court struck down the law giving leaseholders the right to match a higher offer, and the auctions that followed have gone to the highest bidder regardless of how long a family has been on the water. Since 2014, that process has resolved all but a small number of the state's original leased lots at Priest Lake.
Cossette's lot went through that exact process last August. His neighbor won it. The cabin came down within months.
The lesson here isn't that leaseholds are dangerous. Many families have held the same lot for generations without incident, and the association representing Priest Lake's state leaseholders has kept the arrangement workable for most of a century. The lesson is that a leasehold price and a deeded price are answering two different questions, and a Priest Lake listing that looks inexpensive by Bonner County standards may simply be pricing a structure sitting on ground the seller never owned.
Two Ownership Types, One Lake
| Deeded waterfront | State leasehold (cottage site) | |
|---|---|---|
| Typical frontage | 50 to 100 feet | 100 to 150 feet |
| What the price includes | Land and structure | Structure only |
| Ongoing cost | Standard property tax | Lease payment tied to appraised land value, reset periodically |
| At resale | Conventional closing | State collects a share, historically around 10 percent, of the gap between sale price and appraised improvement value |
| Long-term risk | Stable ownership | Lease cost can jump sharply if land values rise between reappraisals |
Where the Program Stands Right Now
As of the Idaho Department of Lands' own cottage site transactions page, no auctions are currently scheduled at Priest Lake, and the agency has suspended pending land exchange proposals while it works through legal and policy questions. Only a small handful of state leased lots remain unresolved, down from roughly 350 when the divestment effort began. Since 2014, land sales connected to the program have brought in well over a quarter billion dollars for the public school endowment fund.
For anyone comparing North Idaho lake markets today, that status matters. A leasehold Priest Lake cabin is close to becoming a historical footnote rather than a standing option most buyers will encounter. Anyone shopping the handful of lots still under lease is inheriting both the steepening cost formula and real uncertainty about when, or whether, the next auction cycle resumes.
What This Means If You're Weighing Priest Lake Against the Rest of Bonner County
Elsewhere in the county, deeded ownership is the default, and financing follows the path buyers expect. At Priest Lake, that isn't guaranteed. When longtime leaseholder Steven Hubbs finally bought the ground under his own cabin in 2014, his first comment to a reporter was simple: now, he said, they had a mortgage. The remark says something about what came before it. Financing a structure without owning the land underneath tends to work differently than financing a deeded lakefront purchase, and that difference is worth resolving with a lender before comparing a Priest Lake price to anything else on the market.
If you're selling a leasehold cottage site, the buyer pool narrows to people willing to underwrite a lease that can reset against a rising land appraisal, and the state's transfer fee comes off the top of your proceeds before anything else does. If you're buying, the question isn't whether the price looks good against the county median. It's which side of the split estate the parcel actually sits on.
A Few Direct Questions
Does every home at Priest Lake sit on leased land? No. About a third of the lake's shoreline is deeded and privately owned outright, mostly on the west side.
Can a leasehold cabin be financed with a standard mortgage? Not in the same way a deeded home can. Buyers considering a state leasehold lot should talk with a lender early rather than assuming the usual process applies.
Is the state auction program still active in 2026? Not at the moment. The Idaho Department of Lands' current page shows no scheduled cottage site auctions, with pending land exchanges paused while the agency reviews legal and policy questions the program has raised.
If you're weighing a purchase or a sale at Priest Lake, or trying to understand how a leasehold parcel actually compares to a deeded one elsewhere in Bonner County, that kind of groundwork belongs at the center of the strategy, not an afterthought after the offer is written. Idaho Luxe builds exactly that kind of due diligence into every listing. Sell Your Property with a team that reads the deed as closely as the view.
