Sandpoint council tackles lot size minimums, short-term rental regulation

By Zach Hagadone
Reader Staff

Sandpoint city councilors made two votes Jan. 21 that will affect future land use and development patterns within city limits — both related to housing, which is widely regarded as one of the biggest challenges facing residents and businesses alike.

In a 4-2 vote, the council chose to move forward with amendments to the city’s zoning code that would allow a greater percentage of construction on smaller lot sizes, meant to encourage infill development and middle-income housing.

In another 4-2 vote, councilors also approved an overhaul to Sandpoint’s ordinance regulating short-term rentals, eliminating the city’s current cap of 35 non-owner-occupied STRs in residential areas, but also imposing numerous other policies to comply with recent court rulings and Idaho statute, while anticipating potential new state legislation or a potential lawsuit.

Lot sizes

On the first item, Planning and Community Development Director Jason Welker walked councilors through a “thought experiment” that imagined what Sandpoint would “look like in 20 years if we stopped housing development today.”

“All of our planning documents in the city anticipate housing demand to grow at 2.5% per year, so this is a very simple math problem here,” he said, going on to refer to a presentation slide that showed 3,600 locals remaining in the city compared to 6,400 new residents, representing a 64% change in population “with enormous displacement.”

That would be if housing development did not keep pace with demand over 20 years. Meanwhile, the slide showed 10,000 locals remaining and 6,400 new residents, for a 39% change in population with “minimal displacement” should building keep pace with demand over the same period.

“Stopping housing growth produces more change, not less,” Welker said. “These code amendments are not about growing Sandpoint faster — they are about ensuring the people who live here today are still here tomorrow.”

According to the Sandpoint Comprehensive Plan, approved by council in 2024, growth estimates show the city will need 2,500 new housing units by 2040, driven almost entirely by in-migration. Meanwhile, there are currently about 5,000 housing units inside city limits.

The code amendments approved by council on Jan. 21 are intended to lower the barriers to construction of small-scale infill development, such as accessory dwelling units, duplexes, triplexes and town homes, on single-family residential lots.

In addition, single-story buildings may exceed the current 35% building footprint maximum.

In residential multi-family zones, the 40% building footprint would be relaxed, clearing the way for adding new on-site dwelling units and keeping new units from being forced into smaller footprints.

The percentage of a multi-family residential lot that can be covered by “impervious surface” — whether living space, paving or other development — is 70%, and that will remain under the amendments approved Jan. 21. However, the new code would also allow 70% impervious surface on single-family lots (an increase of 5%). 

Finally, while Sandpoint already has hundreds of lots as small as 3,500 square feet, many were platted a century ago and have since become non-conforming under City Code. The new code amendments would enable the creation of future 3,500-square-foot lots — including for multi-family residential — which would accommodate one dwelling unit each. That represents a reduction from the previous 5,000-square-foot minimum.

“We’re saying let’s just make these standard lots. Let’s make these legal conforming lots, not some weird category of historic lot that we don’t allow anymore,” he said, later adding that the overarching goal is to “loosen the building footprint maximums to enable more living space per square foot of real estate and ultimately to increase the supply and choice, so price pressure is not forced into a small set of housing types.”

Councilor Pam Duquette was skeptical, saying that while land might be cheaper, building prices will remain the same or increase, as would fees and costs to connect to utilities and other infrastructure.

“Those things aren’t going to change. They’re not going to make things more affordable,” she said.

Councilor Joshua Torrez worried that the code doesn’t contain any “safeguards” for affordability, such as deed restrictions or income targets to ensure that new units would serve long-term residents, rather than investors.

“No, there’s no guarantees,” Welker said. “We only have the leverage we have. … What we know for sure is that a 5,000-square-foot lot size minimum for a single-family home when it hits the market will be a higher price than a 3,500-square-foot single-family home.”

Public testimony echoed some of those worries, though others saw the code amendments as a reasonable step toward creating greater opportunity to bring more modestly priced residential properties onto the market.

“We all know people are pushed out because they can’t afford the property,” said resident Julie Perchynski. “It’s not because the lots are big; it’s not because the lots are small. It’s because people coming in to buy them have more money than people that are here. So that’s kind of a no-brainer. Lot size didn’t drive people out — housing prices did.”

Anticipating the later vote on Sandpoint’s short-term rental regulations, she added: “[M]aybe we should consider not increasing our vacation rentals, because that — all over the world — is what’s affecting affordable housing.”

Speaking on behalf of the Pend Oreille Economic Partnership, Executive Director Brent Baker said that housing affordability is far and away the biggest barrier to businesses hiring and retaining local employees, and therefore hampers economic development when companies decline to locate in the area.

“We have to do something, whether it’s exactly this or something like this. … You can’t do nothing,” he said, going on to highlight alternative affordable housing models like the partnership between Leap Housing, Kaniksu Land Trust, the Bonner Community Housing Agency and others to supply upward of six deed-restricted homes in Priest River.

While collaborations like that help address the problem, Baker said the affordability crunch is even more dire than it seems.

Citing numbers from United Way, he said, “approximately 42% of our population in this county is asset-limited, income-challenged [and] employed. There are 42% of our people who are one or two paychecks away from being unhoused. So we need every option we have to plug the missing middle.”

Resident Rebecca Holland described the code amendments as “a developer’s dream,” adding, “there’s always going to be people who want to come here and live here, but there’s just so much room for everybody. You can’t continue to just fill it up like a big game of Monopoly.”

Developer Derek Mulgrew testified that he could finance a project with smaller lots and “make it up with density.”

“We need this missing middle housing and an opportunity to have different product at a lower price point,” he added. “And if it’s on a smaller lot, it’s going to be less than the same product that’s on a much bigger lot.”

Councilor Joel Aispuro moved to approve the amendments as presented, though Schreiber still worried that increased infill would reduce the city’s urban tree canopy with impacts on stormwater management — all while altering neighborhood character — and with no assurance that new units would actually be affordable.

“We can develop every square inch of the town and it’s going to continue to be unaffordable,” he said. “We don’t have enough land to supply the demand for luxury and second homes and investment properties.”

Aispuro doubled down, saying the amendments were “tools in our toolbox as an opportunity to give some people a chance” and it can’t — and won’t — fall to Sandpoint to “solve” affordable housing.

“It’s a federal issue, whether it’s a Republican or Democratic president,” he said. “Sorry. They’re owned and they’re run by the Federal Reserve banksters, right? You got JP Morgan and you got BlackRock. And some of you are probably like, ‘Whoa, this guy listens to Alex Jones way too much.’ Actually, no. It’s just basic economics.”

Council President Deb Ruehle seconded the motion, with Councilors Joe Tate and Torrez joining Aispuro and Ruehle in voting “yes.” Duquette and Schreiber opposed.

Short-term rentals

Following the vote on lot size minimums, councilors took up amendments to Sandpoint’s short-term rental regulations; but, first, Mayor Jeremy Grimm expressed his disappointment that the issue even had to be addressed by council.

“I am not pleased this item is before us tonight,” he said. “The salient point here is there’s an intense lobbying effort to preempt local control and take the ability to manage and regulate short-term rentals out of our hands, which I totally disagree with.

“I think short-term rentals degrade neighborhoods. I think short-term rentals degrade communities and take housing away from our workers,” he added. “The only reason we are proceeding with this tonight is simply because the Supreme Court has spoken in Idaho.” 

While rulings in both the Supreme Court and District Court in the past year have muddied the waters regarding how — or even whether — municipalities can regulate STRs, vacation rental company Airbnb has engaged with lobbying in Boise to see all but the most basic powers of regulation taken from cities. Grimm said City Hall is aware of at least one piece of legislation moving through the Statehouse this session that would do just that.

Sandpoint’s prior STR regulations were legally indefensible, given that they include a cap of 35 non-owner-occupied units in residential areas, and put the city at risk of a lawsuit from STR operators claiming that the limitation amounts to a prohibition, which is not allowed by law.

The new STR regulations lift that cap, though introduce a number of new policies such as creating a high-occupancy category that puts additional permitting requirements on properties that house 10 or more occupants, enforces new parking standards, and stipulating that non-owner-occupied STR operators must have a representative within 20 miles or employ a local property management firm, among other administrative changes.

While no legal action has yet been filed against Sandpoint over STR regulations, City Attorney Fonda Jovick said, “the adjustment that’s presented tonight is to adopt a legally defensible code.” However, if the Legislature votes to approve legislation such as has been lobbied for by Airbnb, the amendments approved on Jan. 21 would need to be rolled back sometime after July 1, when new state laws go into effect following the legislative session.

“They’re using Idaho because of the composition of the libertarian slant of our Legislature,” Welker said. “We’re ripe for testing the limits of deregulation and, if they can get away with this in Idaho, they’re going to move on to all the other states and see if they can just achieve full deregulation of STRs nationwide.”

Public testimony was entirely against the amendments, including from Baker — again speaking for the Pend Oreille Economic Partnership.

“I think it’s absolutely horrible from an economic development point of view,” he said, later adding, “It’s totally interfering with our ability to deal with what we’ve already identified as our No. 1 issue here, which is affordable and workforce housing.”

Councilor Torrez agreed, saying, “As we consider removing the STR caps, how are we accounting for the fact that we’re also increasing density? And what tools do we have to ensure new units created through density don’t disproportionately shift into the short-term rental market instead of serving local residents?”

Grimm responded that there are no guarantees that the flexibility provided by the relaxation of lot size limits and new code encouraging infill development won’t be taken advantage of by STR operators, but, “We’re just trying to avoid the cost of litigation and to create a code that’s legally defensible.”

Schreiber moved to indefinitely postpone a decision on amending Sandpoint’s STR regulations until it’s actually challenged or the Legislature makes a decision, doubting that the 35-unit limitation amounts to a “prohibition” under state law.

“My view on this is that allowing 35 of something is not prohibition,” he said. “If, you know, if I limit myself to 35 beers, am I as sober as if I had none? I’m not inclined to blatantly violate our Comprehensive Plan based on rumors and when our ordinance has yet to be challenged.”

Duquette seconded that motion and Torrez also voted “yes,” while Aispuro, Ruehle and Tate voted “no,” making for a tie that Grimm broke with another “no” vote.

Calling it a “heartbreaking case,” Ruehle said that while she’d “love to dig my feet in and take a stand … I’m not willing to spend your taxpayer dollars on this.”

The final vote to approve the amendments as presented passed with Aispuro, Ruehle, Tate and Torrez in favor, and Duquette and Schreiber opposed.