Just shy of midnight on Monday, the Caldwell City Council declared “imminent peril” and enacted a six-month moratorium on residential development in response to a new property tax package signed by Governor Brad Little last week.
The sweeping state legislation, passed in the final days of the 2021 legislative session, sought property tax relief with a variety of changes. This includes bumping the homeowner’s exemption to $125,000 and personal property tax cuts, as well as caps on how much local government budgets can grow every year and how much tax revenue they receive for new construction and annexations.
The restrictions on local government budgets kicked off a flurry of hurried conversations in high-growth Treasure Valley cities to slow homebuilding due to fears the tax revenue will no longer be able to cover the costs required to serve new development. Caldwell, Nampa, and Meridian all convened on the topic this week to discuss the legislation’s impact on their budgets and discuss new restrictions going forward.
Supporters of the new restrictions say it will give high-growth cities time to decide how they will move forward and create new processes to evaluate developments to see what their cost to taxpayers will be. On the other hand, developers and opponents are concerned slowing building will further worsen the housing shortage and push prices even higher than they are now.
Impacts to fire and police services
Caldwell took the firmest stance so far with its moratorium, which pauses new residential plats, planned unit developments, annexations and special use permits for residential developments. City Attorney Douglas Waterman told council the goal is not to permanently block construction, but to give city staff time to develop a new policy and ordinance to evaluate if developments will be financially feasible for cities to approve.
Waterman originally proposed a maximum of 182 days for the moratorium, but several council members expressed concern with the length of time due to its impact on southwestern Idaho’s housing shortage and shortened it to 120 days.
During the meeting, Waterman and Caldwell finance staff told council the impacts of the property tax legislation means the city will have less revenue to pay for fire and police protection for the booming city.
“Citizens expect growth to pay for itself, which will now be more difficult for the cities to maintain,” Waterman told council. “The consequences here are for life safety staff and police and fire will be stretched thin trying to meet demand.”
Throughout the presentation, several council members shook their heads in disbelief at the property tax legislation and Little’s decision to sign it despite acknowledging concerns about potential unintended consequences.
‘How do we ask more of these employees’
City Council Member Dennis Callsen was one of the members who voted for the moratorium, which supporters said would help give the city time to come up with a new plan for how to handle growth.
“I’m a former fireman,” Callsen said, prior to the vote. “We have three stations now and they’re running 30 and 40 calls a day right now. When I was there, it was 7 or 8 calls a day for the whole city. I’m to the point where I think ‘how do we ask more of these employees without having the opportunity to give them more’.”
Council Member Jarom Waggoner was the one member to vote against the moratorium. He is concerned about the budget impacts from the new legislation, but didn’t want a moratorium without more time to consider the idea.
“I just want to understand it better,” Waggoner said. “With all of these numbers, it’s so convoluted. No disregard to staff, but it is so much detail and I want to understand it better to get the county, the city, and (staff) together and see if there’s something we can do without a moratorium.”
Kling: ‘No growth is not good’
The City of Nampa is looking at changes too, but stopped short of a moratorium.
On Friday morning, the Nampa City Council held a special meeting to discuss the impacts of the new property tax legislation. Mayor Debbie Kling and other members of the council came to the conclusion as Caldwell and directed staff to develop a new system for evaluating the cost of services for new subdivisions to taxpayers, but there wasn’t enough support to put a temporary stop to projects like their neighboring city implemented.
“I think we’re going to have some big decisions in front of us about what that balance is,” Kling said, about the costs of growth and the need for new housing. “No growth is not good and some people say we should stop growth, but if you stop growth then your existing shortage is going to be compounded and you don’t have additional revenues coming into the city to offset the cost of services to the city.”
Nampa’s Finance Director Doug Racine said this legislation heavily impacts cities that regularly see double digit growth and received a sharp increase to property tax collections under the old system to go along with it. Cities on the edge of the Treasure Valley like Nampa, Caldwell, Star, Kuna and Meridian that were once small agriculture towns are now booming with expansive subdivisions that demand more police, fire and sewer services in a short amount of time are strained the most.
“If you have high growth, this is going to hurt,” Racine said.
City Council Member Darl Bruner broke with Kling and asked for a brief moratorium on residential construction in order to plan for the coming changes to the taxing formula.
“Let me make it clear where I stand: P.A.U.S.E,” he said. “We need a pause and that’s for residential. Until I personally can get a better idea of what the cost of services are and the fiscal impact on the city I would like to look on a case by case basis at any new applications and I would like a pause.”