Sandpoint P&Z to consider ‘substantial overhaul’ of short-term rental regs

Push for deregulation coming from Idaho legislators and lawsuit threats

By Zach Hagadone
Reader Staff

Big changes are in store for how the city of Sandpoint regulates short-term rentals — or doesn’t regulate them — as Mayor Jeremy Grimm and Planning and Community Development Director Jason Welker announced at the Nov. 5 meeting of the City Council.

According to Welker, the Sandpoint Planning and Zoning Commission will consider a “substantial overhaul” of the city’s STR ordinance at its regular Tuesday, Nov. 18 meeting, “to bring them into compliance with state law.” 

Welker pointed to “several lawsuits against resort cities in Idaho” over the past year challenging caps and other regulations on the number of STRs, and Sandpoint is “desperately trying to avoid a lawsuit” that would force them to be overturned.

Currently, Sandpoint City Code limits the number of STRs in residential zones to 35, unless they are owner-occupied. Meanwhile, organizations representing STR properties, including vacation rentals, have been pushing back against those limitations with court cases, and are “teeing one up against us,” Grimm said on Nov. 5. 

In response, the mayor said, Sandpoint will consider removing that restriction to avoid going to court.

“It’s not out of a desire, it’s out of a practicality of litigation and cost,” Grimm said. 

Welker described the ordinance due to appear before P&Z on Nov. 18 as deregulating the number of STRs in Sandpoint and “making them available to any speculator or investor who wants to buy a house and convert it from a place that a community member lives to a place where a visitor will come visit.” 

That could have a major impact on the available housing inventory, and the push for deregulation of STRs is coming in part from the Idaho Legislature.

Welker told councilors on Nov. 5 to “keep a close eye on Boise this winter. We believe there’s going to be a really strong effort among some legislators down in Boise to basically strip cities of all rights to regulate short-term rentals whatsoever.”

While he said that it’s likely not “a very popular effort … it’s happening nonetheless.”

“If that effort succeeds within a year or two, we may lose the right to regulate short-term rentals whatsoever in the city of Sandpoint,” Welker added. 

Sandpoint regulates STRs to collect rental lodging taxes, which amount to 14%, with revenue divided 50/50 between: 

• Public safety services, public parks, and other infrastructure and capital projects; and,

• Infrastructure expenses such as street pavement, sealing, widening, reconstruction and associated stormwater infrastructure; improvements to the Pedestrian Priority Network, including maintenance of sidewalks and pathways, as well as reconstruction and extensions to provide connectivity and increase ADA accessibility and safety; and property tax relief.

The council approved that bed tax fee increase from 7% to 14% in 2022, and voters accepted it at the polls that year. The bed tax is due to expire on Dec. 31, 2035, and the increase passed in 2022 was estimated to raise $6 million over the course of the life of the tax. It applies to “all short-term rentals of 30 days or less, including hotels and motels, condos and vacation homes,” according to the ballot language.

“That’s one reason we need to know who operates short-term rentals — and to protect neighborhood integrity and character,” Welker said on Nov. 5. “I don’t think many people here want to see thousands of short-term rentals operated in Sandpoint. [It] really does impact the neighborhood character. So, keep an eye on what’s going on down in Boise.”

The Sandpoint P&Z will meet Tuesday, Nov. 18 to consider the ordinance changes and will meet at 5:30 p.m. in the Council Chambers at City Hall (1123 Lake St.). To watch the meeting remotely, go to sandpointidaho.gov/calendar, click on the Nov. 18 P&Z meeting and follow the instructions to access the feed via Zoom.

The city posts recordings of its meetings afterward on its official YouTube channel.