Sandpoint council adopts full impact-fee schedule after debate over phased approach

Sandpoint — The Sandpoint City Council voted Wednesday to adopt the 2025 Capital Improvement Plan and implement updated development impact fees at the full, "100%" level recommended in the consultant study, a decision supporters said ensures growth pays for growth while critics urged a phased approach.

The council approved the measure in a roll-call vote after more than an hour of questions and debate about timing, affordability and how collected fees would be used. President Ruhl moved to adopt the full fee schedule; Councilor Schreiber seconded, and Mayor Jeremy Grama cast the deciding vote after the roll call resulted in a tie. The motion passed.

Council members deliberated whether to phase increases over three years or adopt the consultant'recommended maximum immediately. Supporters said adopting the full fee now places the cost of new infrastructure on new development. Opponents warned the list of capital projects in the plan is ambitious and that immediate full implementation could strain the city's ability to deliver all listed projects.

Jason Welker, the city's Community Planning and Development director, told council the capital plan lists roughly $58 million in needs over the planning horizon, but only about $15 million of those costs are eligible to be funded by impact fees under legal guidelines. Welker said the city can adopt fees lower than the maximum recommendation, but that would shift the gap to other revenue sources.

Nicholas Hough, a consultant from Tischler Bise who prepared the impact-fee study, told the council that a typical single-family example in the study illustrates the scale of the charge: at a $250-per-square-foot construction cost, a 2,000-square-foot house would pay impact fees equal to about 1.06% of construction cost under current rates and roughly 2.5% under the maximum supportable fees proposed in the study. "To the best of my knowledge, yes," Hough said when asked whether Idaho law allows developers to request a site-specific analysis to contest a fee.

Hough also explained how most of the categories in Sandpoint's proposed fee schedule were calculated: parks, pathways, police and fire fees were derived from an incremental-expansion approach tied to the city's existing level of service, while the transportation (streets) fee used a plan-based approach that allocates the growth-related portion of specific transportation projects.

Welker cautioned council that collecting impact fees creates expectations about projects, and if the city collects fees but does not proceed with plan-based projects tied to those fees the city could face accounting complications, and in some cases might need to return funds. He said the fees are adopted annually in the city's fee schedule and that the council would have the ability to hold fees at a level in subsequent years.

Councilor Rick Howarth pressed the consultants and staff about whether higher fees would slow development, and Hough said impact fees can influence where developers choose to build but usually represent a relatively small share of total construction cost unless fees are extremely high. Hough said some jurisdictions stage fee increases to soften market impacts and that staging can spur development in the near term, while immediate adoption at maximum levels would capture more revenue sooner.

Councilors also asked about timing rules for using fee revenue. Hough advised the council that fee revenue generally must be spent on eligible projects within about eight years, with limited circumstances extending that to 11 years.

No members of the public signed up to speak at the hearing. The council's decision to adopt the fee schedule will be reflected in the city's annual fee resolution and included in next fiscal year's budget schedule.

Votes at a glance: Motion to adopt impact fees at 100% level — moved by President Ruhl; second by Councilor Schreiber. Roll-call resulted in a tie; Mayor Jeremy Grama cast the tie-breaking vote in favor. Motion passed.