‘This is fast’

By Zach Hagadone
Reader Staff

Representatives of Portland, Ore.-based Leland Consulting Group returned to the Sandpoint City Council at its regular meeting Dec. 7, filling in councilors on updates to the study the firm has been producing for the past nine months. 

Providing projections and policy recommendations on a raft of topics and issues — including area land use patterns, economics, population growth and housing demand — the big takeaway from company President Chris Zahas: “This is a really fast-growing area — even among the shortlist of fast-growing cities in the country, this is fast.”

Putting a finer point on it, the report noted that while annual growth from 2010 to 2020 averaged just under 1.5%, it “leapt” to more than 4% in over the past two years.

The effect that has had on local housing prices is evident to anyone who’s cruised through local listings over the past 24 months. 

A graph showing Bonner County annual building permits, with green denoting Sandpoint permits and blue the rest of Bonner County. Image courtesy of Leland Consulting.

“Just in the past couple years, since 2019, your average price has doubled,” Zahas said. “Now it’s approaching $700,000 — that’s from April, it may have even gone up a little since then, or down, as markets have been fluctuating.”

Meanwhile, the amount of vacant housing in Bonner County fell from 31% in 2010 to 25% in 2020, with Sandpoint accounting for 16% of all housing units in the county but only making up 7% of the vacancies.

According to the report, there was a big jump in second homes and vacation homes in the decade between 2010 and 2020, representing a rise in vacancies of those properties from 4,111 to 5,652, resulting in there being 1.5 housing units for every resident household in the county.

That said, only 4% of those types of seasonal or short-term residences were within city limits.

“Some of that may have changed [from 2020 to 2022], but what we’re seeing is it’s a more significant issue in the county than the city,” Zahas said.

What all that boils down to is that while there are enough physical housing units to go around, the inventory left in the city is still tight, as what little of it there was has been taken up by second- and vacation-home owners. 

There’s still available land in the county, however, but a much higher percentage of the existing housing units there are standing empty for at least some portion of the year.

That told Leland consultants that second-home housing isn’t hurting Sandpoint so much as it is having an impact on county land use patterns, and that is underscoring the need to expand the area of city impact to the west — a project that Zahas emphasized as “the only growth opportunity that has the scale to move the needle on housing production.”

Simply put: Sandpoint needs more housing units to outrun the exploding demand, but it doesn’t have the necessary space to accommodate them. Still, though, there are upwards of 1,700 units at some stage in the pipeline — meaning anywhere from the preliminary platting stage or currently under construction.

“It’s just phenomenal the amount of projects you have in the pipeline at various levels of planning,” Zahas said, though added that, “Playing the dismal economist role, those aren’t all necessarily going to happen.”

As of August, there were 285 units of housing fully permitted and entering construction; 678 in projects awaiting approval and/or seeking rezone, with at least 80% in the multi-family category; and 738 more in projects earlier in the process.

“If all those come to fruition, that’s a huge impact,” Zahas said.

Looking ahead 10 years, the Leland report foresees potential demand for between 400 and 600 apartment units, with the bulk of that demand coming from the lowest-earners, in the $35,000 per year and lower bracket. Meanwhile, demand is estimated for between 200 and 400 condos and townhomes — primarily among those earning $50,000 and above — and from 360 to 530 small-lot single-family homes, also from the same income bracket. The next decade is expected to draw demand for only 65 to 87 large-lot single-family homes, though by necessity those would be located in the county.

Again, Leland consultants stressed that most of the capacity to build those units would be in the area of city impact, which planners identify as the area west of the railroad tracks and to the foot of Baldy Mountain. However, there are complex hurdles to cross to make that happen, ranging from coordination with surrounding municipal government to ensuring adequate utility infrastructure — all things the report said the city can and should play a critical role in accomplishing, if in no small way to provide “a level of certainty” for the building community, without which “nobody’s willing to make the first move,” Zahas said. “We put that pretty strongly in the recommendation.”

After taking in the presentation, Councilor Jason Welker asked for advice from Leland on how to appropriately message the need for big changes to land use in the city.

“Higher density is a bad word in this town; building heights, a bad word in this town; sprawl into the rural areas, it’s like sacrilege to talk about that around here,” Welker said, later adding, “What are the costs to the people who live here today if we don’t rise to this challenge?”

Zahas responded:  “I think there’s a million cities in Colorado that you could point to that says, ‘if you don’t address it this is what you’ll look like in 10 years.’”

Leland Senior Associate Ted Kamp, who previously lived and worked in Colorado, provided an apt summary of the choices and forces facing Sandpoint both today and the years to come.

“It is a very tough challenge because there are physical aspects to Sandpoint that are just flat-out desirable and the supply of places where you can put people is limited, so you have to grow as smart as you can and make density palatable,” he said. 

“Just closing the doors on development and growth is a recipe for just really runaway housing prices like the Aspens and Tellurides and even Boulders of the world, where it is very difficult to find someone who knows how to change a tire or make a latte because you can’t afford to pay those people to live close enough to where you are,” he added. “If you want to maintain a real economy and a decent quality of life, you have to increasingly find ways to make density sane and palatable. … 

“There’s not a real silver bullet to the supply, demand and desirability of place that you’re facing.”

Watch the Dec. 7, 2022 meeting of the Sandpoint City Council at the city’s YouTube channel. Read the Leland Consulting Group report at sandpointidaho.gov under “Meetings,” click the 2022 archive on the right side of the page. Go to the last page of the archive and click “Sandpoint City Council Meeting Agenda-Packet 20221207. The report is Agenda Item 7D.