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City wins Supreme Court affirmation; county must redistribute withheld penalties and interest
Summary
City Attorney reported a legal victory: Idaho Supreme Court affirmed a lower court ruling that Kootenai County must distribute penalties and interest from delinquent property taxes proportionately to taxing districts. The city has recovered about $126,000 in principal plus roughly $20,000 in interest (about $147,000) and received attorneys' fees.
City Attorney Field Harrington updated council on successful litigation over Kootenai County’s prior practice of withholding penalties and interest on delinquent property taxes. Harrington said the county had begun withholding those funds in October 2022; the cities and other taxing districts challenged the practice in district court.
The district court found for the taxing districts, concluding Idaho law requires penalties, interest and costs to be apportioned to the taxing districts rather than kept by the county. The county appealed to the Idaho Supreme Court, which unanimously affirmed the lower court’s decision, reiterating that counties act as agents for tax collection and may recover collection costs only if properly adopted.
Harrington said the city has recovered approximately $126,000 in principal and about $20,000 in prejudgment and postjudgment interest (total around $147,000), along with an award of attorneys’ fees and costs. He said monthly distributions to the taxing districts have resumed as the county collects delinquencies going forward.
Council discussed how recovered funds will be recorded, and staff said the amounts will likely be handled through a budget amendment or fund‑balance adjustment.
