Council reviews proposed shift to square-foot residential impact fees, drops unfinished-basement exemption and removes affordable-housing waiver

City staff presented a proposed rewrite of the city’s development impact fee ordinance that would calculate residential impact fees on climate-controlled square footage rather than per housing unit, clarify what counts as residential square footage and remove a standing affordable-housing exemption that previously appeared in the draft ordinance.

Mike (staff) explained the proposal would measure residential development impact by a structure’s climate-controlled square footage — a proxy for spaces intended for living — and would exclude automobile garages and accessory storage from the fee calculation. "The calculation of a residential development impact fee shall be determined by the climate controlled square footage of the structure," staff told the council in a reading of the draft language. Staff said the change was intended to avoid later disputes over whether unfinished basements or attached accessory spaces should be counted.

Councilors asked how the climate-control metric treats basements and accessory dwelling units. Staff and the city’s consultant explained climate control ties back to building-code requirements (International Building Code) that require heating systems for habitable spaces; therefore a newly finished basement that is climate-controlled would be counted, and an accessory structure with a complete self-contained living unit would also be counted. Staff said impact fees apply only to new construction, so older homes without climate control in basements would not be retroactively charged.

Another substantive change in the draft removes an affordable-housing exemption that had been in the draft impact fee ordinance. Staff said state law requires any waived impact fees still be accounted for in the impact fee fund — the city must find alternate funding to cover any waived fee — and councils had rarely been able to secure those replacement funds. "One of the recommendations ... is that it was not fair to lead developers on that, they might get a affordable impact fee waiver but the council hadn't funded it," staff said, recommending the exemption be removed and that staff pursue other incentive mechanisms for affordable housing (development incentives or grant sources) outside the impact-fee ordinance.

Staff outlined a schedule: a work session August 11, tentative planning commission and council steps in September (public hearing tentatively Sept. 25) and implementation to align with an updated impact-fee study and possible January 1 effective date the following year. Councilors pressed staff on legal risk and on how other Idaho cities define square footage for impact fees; staff said most Idaho cities using square footage do not exempt unfinished basements and several local governments base fees on climate- or heated-square footage.

Why it matters: The change alters how impact fees — charges meant to recover capital needs caused by growth — are calculated for new housing. Moving to a square-foot basis shifts the charge from a per-unit approach to a size-based approach that more closely correlates to potential service demand. Removing the affordable-housing exemption shifts the direction for how the city will support subsidized housing, by pursuing alternate incentives rather than guaranteeing fee waivers.

What’s next: Staff will refine draft ordinance language, add an explicit definition (staff offered to insert a cross-reference to the building code), continue coordination with the Impact Fee Advisory Committee, and pursue other incentive programs for affordable housing coordinated with municipal services and economic development staff. Council set a tentative timeline for public hearings and additional work sessions.