Sandpoint Mayor Grimm fronts 1% local option sales tax to fund street repairs

By Zach Hagadone
Reader Staff

Sandpoint residents weary of degraded street conditions throughout the city may have the opportunity to weigh in on a 1% local option sales tax that Mayor Jeremy Grimm promoted during the Aug. 7 meeting of the City Council. 

Funds from the tax would be directed toward street work; however, whether the LOT makes it on the November ballot will be up to councilors, who are expected to make a decision at their regular Wednesday, Aug. 21 meeting at City Hall. The deadline for ballot language to be submitted to the Bonner County clerk is Sept. 6. 

Grimm pitched the idea Aug. 7, saying that in his seven months as mayor, “and having acquainted myself with the shortfalls and challenges that we face as a city,” Sandpoint’s streets are a high priority for his office — improving them, but also simply maintaining them to “prevent them from literally falling into the clay,” he said.

Sandpoint Mayor Jeremy Grimm. Courtesy photo.

“Barring a solution like this, I do not see a path forward to fixing our roads,” Grimm said near the end of his presentation.

That was after he walked councilors through the broad strokes of the tax proposal, which he promised to bring back Aug. 21 with more fine-grained detail. 

However, at the Aug. 7 meeting, Grimm fronted some rough costs for three options. For the most basic rebuild of city streets — bringing roads to the national average, meaning 15-20% of streets are in “poor condition” — he estimated $44 million. 

Currently, about 60% of the city’s streets are rated “poor,” and without any action, Grimm showed a graph suggesting that without any action, “in the next few years, we go, like, 90% of our roads being in very poor condition.”

One tier higher — the “rehab all” option — would include reconstruction of sidewalks and run upward of $73 million. 

The “full reconstruction” option of new base rock, curb-and-gutter, surfacing, sewer and water (including sewer laterals) and repairs on the city’s 330,000 linear feet of sidewalk would top $333 million.

Grimm called the middle option “a little more palatable,” though provided some rough estimates for what a 1% tax could accomplish based on the third “full reconstruction” option.

“Based on conservative collections, after 25 years, we’d be about $3 million away from that, and that would be in my mind a once-and-for-all solution to the street problem, the sidewalk problem, the sewer lateral problem, that we could offer our residents; and, barring a solution like this, I can tell you that the road conditions … will continue to degrade, degrade, degrade, degrade, to a point that it won’t be an exaggeration that we will be driving on gravel streets,” he said.

Time is of the essence for the LOT, according to Grimm, since Idaho Code only makes that tool available to “resort communities” with a population under 10,000. The most recent tabulation from the U.S. Census, in 2020, put Sandpoint’s population at 8,639. The next census, in 2030, will likely show that the city has grown past 10,000 residents. 

Grimm said he wants to get ahead of that demographic trigger and lock in the LOT now for a period of 25 years, but that will require council approval and, ultimately, 60% of voters to approve the LOT on the November ballot. 

It’s not without its drawbacks.

“The pros and cons of it are that the biggest individual item that generates this money is grocery sales, which really sucks, because it’s a regressive tax,” Grimm told the Reader in an interview ahead of the Aug. 7 meeting.

The last time Sandpoint imposed a 1% local option sales tax was to fund reconstruction at War Memorial Field and Barlow Stadium, which Grimm said gives the city some insight into how much money the LOT could bring in and on whom it will fall.

“[W]hen we had that tax in place, we know that grocery sales take a tremendous bump in the summer — a big, big peak in June, July and August — so we know that a significant portion of that tax collection would be from out-of-town users or shoppers,” he said, later adding, “To that degree it’s not just Sandpoint residents paying the tax.”

For instance, he told the council, grocery retailers he’d spoken to said their revenue is expected to show a 34% increase from the same period last summer.

“I bring this up because I don’t pretend to favor this tax; especially when the main driver of it comes from food sales, grocery sales. It’s a very regressive tax in that respect,” he told councilors, going on to show figures suggesting that the $80,000 collected in April — during “mud season” — compared to $149,000 collected in July shows “that bump is primarily related to tourist-related activity.”

In addition, the city’s streets budget is supported by a portion of the 14% lodging tax approved by voters in 2022 — 7% going to public safety and parks and 7% toward streets, the latter accounting for about $1 million per year, which roughly doubled the previous allocation.

“Fifty-three percent of the lodging tax that we collected in Sandpoint came in those summer months. So I want to just start by emphasizing that this tax isn’t going to just be paid by Sandpoint residents and arguably those who can least afford a tax, but it’s going to be paid significantly by outside residents and visitors to our community,” Grimm said.

While he expressed regret about the regressive nature of the tax, Grimm pointed out that Ponderay is going to its voters in November to renew its 1% local option sales tax, which he described as providing some equity for area shoppers.

“So there’s some equality to that in some sense that whether you shop in Ponderay or here, your $1 purchase is going to be $1.01,” he told the Reader in an interview.

Grimm said that the average Sandpoint household spends between 12% and 13% of its income on food. Assuming the median income is about $60,000 per year, “the typical household will be spending about $77 additional dollars if this tax of 1% were applied, or about $1.48 [more] a week,” he said.

City Council President Deb Ruehle pushed back on Grimm’s proposal, emphasizing that she wants to see more detailed figures and data before making a decision on Aug. 21.

“I think 25 years is an awful long time. It seems like we’re being rushed and pushed up against a deadline — I don’t love that,” she said. “I’d like you to come back with a lot more information on all the new revenue sources that are going to come in, including with the new hotel, and the increased lodging tax.”

Ruehle also noted that the final units of the Seasons at Sandpoint have come online, further contributing to the tax base, plus new housing moving through the construction pipeline. 

In previous statements and interviews, city officials including Grimm have stated that as many as 1,000 new housing units are in various stages of development, which are hoped to lessen the tight market for renters and buyers alike. Whether that actually happens is anyone’s guess.

What’s more, Ruehle cast doubt on if it was wise to focus so keenly on street work, potentially to the detriment of pathways for pedestrians and cyclists and other elements of city infrastructure.

“I feel like we’re kind of choosing just one area of the city and maybe there could be some regrets or some cons to putting all of our eggs in one basket at this point with just this piece of it,” she said.

Finally, Ruehle took exception to a portion of the mayor’s proposal putting the city in charge of rebuilding and maintaining sidewalks — eliminating the current policy, which requires property owners to be responsible for their sidewalks or pay an “in lieu of” fee. 

Grimm has called that system unfair, pointing to instances when property owners living on a certain street may benefit from a city grant that provides their sidewalks — essentially gifting those residents sidewalks — while others pay the in lieu fee that funds others’ sidewalks. Meanwhile, still other residents are saddled with sidewalk expenses if they perform $25,000 or more in improvements on their property.

“It’s wonky,” Grimm told the Reader.

However, Ruehle, argued that the mayor’s proposal was unfair.

“I don’t like the part about taking over the sidewalks in the sense that a lot of people have had to pay for their sidewalks and if we’re doing that we’re going to subsidize developers, and I’m not OK with that; we’re even going to subsidize maybe individual homeowners,” she said.

In the end, Ruehle reiterated that she worried about “putting all the eggs in one basket” though agreed that the 25-year timeframe made sense. 

However, “because of the duration, we need to spend some time thinking about what we’re doing with that.”

The Wednesday, Aug. 21 meeting of the Sandpoint City Council will take place at 5:30 p.m. at City Hall (1123 Lake St.). Stream the meeting live at sandpointidaho.gov.