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Property tax law convinces growing Idaho city to pause residential development

·2 min read

Caldwell recognized its “imminent peril” Monday night that’s the result of a controversial property tax bill passed by the Idaho Legislature.

The Caldwell City Council passed a moratorium that pauses residential growth in the city for 120 days.

The moratorium, which says that “imminent peril exists in Caldwell,” pauses the approval of new residential plats, planned urban development, new annexation where the proposed use is residential development and residential special use permits.

In a city that grew by approximately 26% between 2010 and 2019, according to Census population estimates, pausing growth could have a significant impact.

The decision was made after the passage of House Bill 389, a new property tax law touted as relief for Idahoans. The bill provides a 25% homeowners exemption increase, but also constrains local government budgets. It places an 8% cap on annual local government budget increases, an 80% cap on additional tax revenue from annexations and a 90% cap on additional tax revenue from new construction.

Prior to the law, when growth occurred in city limits, it was followed by an increase in budget capacity for the city, so as cities grew, services like police, fire, trash and others also could expand.

Not now, officials said.

“You are paying for growth in a reduction of services,” said Douglas Waterman, Caldwell city attorney.

The goal of the moratorium is to give city staff time to develop a procedure for monitoring growth and the prior year’s budget, so when development applications come across the council members’ desks, they can ensure that city services meet the needs of future residents, Waterman said.

“The long-term goal is not to stop growing entirely, but to grow as you can to ensure people have police and fire,” Waterman said.

The move was criticized by developers.

Tim Mokwa, land development manager for Hayden Homes, had 57 residential lots approved earlier in the council meeting. He said a moratorium would be bad for the city.

“I suggest you do not make the same mistake that the governor made when he signed this,” Mokwa said. “You guys inherited a very difficult situation. I just suggest you don’t jump into what you think is a solution too early.”

Mokwa said limiting residential development in the midst of “what is already a housing crisis” would increase home values even more.

Jim Carraway, regional director of Hayden Homes, wrote a letter to the council, also opposing a moratorium. He said it would stifle the housing industry, impact construction jobs and exacerbate the housing shortage.

The council will return with a procedure to address growth and budget constraints at a meeting after the 120 days. The council could also return with a solution before the 120 days and end the moratorium early. It passed the council 3-1, with Councilman Jarom Wagoner the lone “no” vote.