City adopts $49.9M FY’26 budget

New fee schedule accepted in tie vote broken by Mayor Grimm

By Zach Hagadone
Reader Staff

The Sandpoint City Council tackled its Fiscal Year 2026 budget, along with setting a new fee schedule, at its Aug. 20 meeting, though not without a little friction.

While the votes to adopt the $49,927,665 budget and certify the amount of foregone to be included were unanimous, Councilor Kyle Schreiber expressed some misgivings.

Referring to the failure of the proposed 1% local option sales tax and results from a recent survey on the wastewater bond measure headed to the ballot in November, he said citizens have expressed that they don’t trust the city to be responsible with the dollars raised from those sources.

“[T]he vast majority of this budget is reasonable spending on the essential services that our community wants, but I’m concerned that some of the capital projects in this budget are going to exacerbate that community wariness,” Schreiber said. “We have millions of dollars going to projects that aren’t in our plans. We have stormwater improvements that are happening prior to our stormwater planning process.”

Sandpoint Mayor Jeremy Grimm asked Schreiber to identify a specific item to address, though he declined to do so citing a number of budget adjustments he proposed at the council’s Aug. 6 meeting, none of which were accepted.

“I’m not going to go through that again,” Schreiber said.

“I believe that this budget is council’s biggest opportunity to regain the trust of our community and prove that we’re wise stewards of these public funds, and we need to focus that discretionary spending on projects that have a noticeable impact on our constituents’ daily lives,” he said. “I just don’t see this budget doing that.”

While Schreiber was the sole dissenting vote to advance the budget to its final readings, he ultimately voted in favor to adopt the ordinance.

The public hearing, deliberation and vote on accepting the new fee schedule was more divided, resulting in a tie vote broken by Grimm in favor of adoption.

Ben McGrann, who serves as the developer’s representative and project manager for the Averill Hospitality hotel redevelopment adjacent to City Beach, told the council that the development impact fees in the new schedule are too high and asked that the city either grandfather projects with existing conditional use permits under the previous fees or put in place a phased implementation process beginning in mid-2026.

“Hotel development is one of the most challenging forms of real estate to finance. Projects depend on delicate finance stacking. Debt equity, small shifts and costs make or break feasibility,” he said. “At the proposed $7,773 per room — a 105% increase — this project is simply unviable. The increase adds $1 million in upfront costs to the project that cannot be absorbed, increasing from current impact fees of just over $300,000 to almost $1.3 million. Again, the project cannot move forward.”

McGrann added that under the city’s occupancy tax — which was doubled to 14% last year — the completed hotel would funnel between $12 million and $17 million to the city before the tax expires in 2035. Meanwhile, he pointed to property taxes and job creation as other benefits to the local economy, as well as an estimated $80 million to $100 million a year in guest spending throughout the community.

“If this project stalls, the city doesn’t just lose impact fee, it loses years of recurring occupancy tax and economic benefit,” McGrann said, later adding, “We remain committed to adhering to the current fee schedule and to the agreed-upon parking in lieu fee of $400,000 that we have proposed to help support the improvements to parking at City Beach. The choice is not between infrastructure and growth; it’s about timing and fairness.”

City Planner Bill Dean cautioned that “it’s probably a safer, easier to track, easier to implement approach if you were just to pick a later date where the fees would take effect.”

Noting that impact fees are paid at the time a building permit is issued, Grimm questioned whether the city would even have the legal ability to grandfather a project before that issuance. 

“I did meet with the representatives from the hotel this morning to talk about this issue,” Grimm said. “There are some other options available.”

Of those, he pointed to the use of urban renewal dollars to help offset the impact fees; amending the fees to delay their implementation; changing the date of impact fee payment to the time of occupancy, rather than building permit; and revisiting the phased approach, which the council rejected on a tie vote broken by Grimm.

Councilor Joel Aispuro proposed taking the development impact fee out of the schedule altogether and addressing that at a later date. Welker said state law dictates that impact fees can’t be implemented until 30 days after a public hearing is held to amend the ordinance, which is anticipated to take place at the council’s regular Tuesday, Sept. 3 meeting.

“So right now the actual implementation date is likely to be closer to Oct. 3,” Welker said.

Councilor Rick Howarth remained unconvinced.

“I understand the necessity for the impact fee increases. I think we heard from the hotel representative — that is a project I think we all want to see come to fruition, so I cannot in good conscience approve the implementation of those fees without understanding there would be a negative impact,” he said. “And so I don’t know exactly to what date we would have to delay that to help them make sure that project comes through.”

Though Grimm repeated that councilors would “still have a second bite of the apple” when they meet to amend the ordinance in September, Councilor Justin Dick echoed Aispuro’s and Howarth’s concerns about the fees.

“They are incredibly steep, not just for the hotel, but the hotel has an amazing economic benefit for the entire community. So I, too, would probably be in favor of either tabling that or delaying that out, however that looks,” said Dick, who noted that he has no current business dealings with Averill.

Council President Deb Ruehle reminded her colleagues that the city had conducted an impact fee study to inform the new schedule, and added, “Don’t base your decision upon one business, one individual — that doesn’t necessarily look good to the public, either. We have to be equal and fair to all development that occurs out there.”

The Aug. 20 meeting also included a lengthy discussion of the downtown monthly and annual parking pass fees included in the schedule, which set maximum amounts for downtown employees, downtown residents and marina slip occupants.

Councilor Pam Duquette was especially concerned about having those fees in the schedule despite not having the full parking implementation plan in place, though Welker responded that those fees can be reduced in the future. Meanwhile, Grimm said the full plan is coming in the next five to six months, when there will be further opportunities to adjust fees.

Downtown Business Association President Shery Meekings offered public comment Aug. 20, reporting that response among members has been “not positive” regarding the parking plan — and specifically the idea of implementing parking meters. 

Grimm and Welker reiterated that the plan is still being crafted and, what’s more, the only parking fees being considered were related to downtown and marina parking passes.

Still, councilors were concerned that even including the maximum parking pass fees in the schedule would rattle downtown merchants.

“Sometimes we may have to make hard decisions. It’s not easy to sit up here,” Ruehle said. “The perception is always different than what the actual outcome is. We’re going to have many options to discuss what the fees are and set that up as they are out there.”

Aispuro, Duquette and Howarth voted “no” to adopting the new fee schedule, while Dick, Ruehle and Schreiber voted in favor, with Grimm breaking the tie.