The city of Sun Valley has been striving to incorporate workforce housing into its comprehensive plan for years—the final implementation of which now has the city in the grips of a lawsuit over whether its plan is constitutional.
Workforce housing refers to affordable living units designed to provide housing for those with low to moderate incomes—often those who compose the city's workforce.
In a lawsuit filed Jan. 29, 2007, Phil and Lynn Schaefer of Tacoma, Wash., contend, via their attorney Christopher Meyer, that the Workforce Housing Linkage Ordinance is unconstitutional. The Schaefers are seeking a refund of the $11,989.97 "in lieu" fee imposed by the city when they applied for a building permit for a new home in the Lane Ranch subdivision.
According to the Linkage Ordinance, developers of new residential homes within Sun Valley city limits must develop or ensure the development of 20 percent of the employee housing generated by the construction of the new home. If housing is not provided, as it was not in the Schaefer case, the developers will be assessed an "in lieu" fee. The fee, according to the city, will help to pay "for a fraction of a workforce housing unit."
The lawsuit is somewhat complex, but the thrust of the plaintiff's argument hinges on the contention that the Idaho Constitution "sharply limits the authority of municipalities to impose fees and taxes."
In a letter from Meyer to Sun Valley Community Development Director Mark Hofman on Aug. 2, 2006, Meyer states, "Under Idaho law, municipalities have no inherent authority to regulate or to tax." Meyer argues that only under the "police power clause" may cities levy fees for "the collection of revenue incidental to the enforcement of that regulation."
The police power clause allows for fees to be imposed on new development. The argument is that the workforce housing "in lieu" fee is, in fact, not a fee at all, but a tax. And the plaintiffs contend the Idaho Supreme Court has clearly deemed taxes imposed at the city level to be illegal unless "expressly authorized by the Legislature."
Taxes and fees are differentiated by their subsequent use. Taxes are used to provide public services that provide for the greater good of a community whereas fees specifically target and/or provide a service to the party paying it.
Meyer argues that "whatever housing might be constructed or subsidized does not benefit this homebuilder in particular. Rather, affordable workforce housing benefits everyone in the community."
Sun Valley City Attorney Rand Peebles responded in a letter dated Aug. 21, 2006, stating that "the city of Sun Valley has not attempted to impose the whole burden of affordable housing on new residential development ... but is one tool utilized by city of Sun Valley in addressing this problem."
Peebles stated that the city's efforts in combating worker housing are designed to "not only address past worker housing deficiencies but also to ensure that future development participates at a reasonable level."
City Councilman Nils Ribi clarified Peebles' position.
"The city has allocated property tax money to use and purchase affordable housing," he said. "In addition, the Inclusionary Workforce Housing Ordinance (which does not affect single-family homes and thus is not part of this lawsuit) deals with affordable housing at the subdivision level.
"Existing property owners do shoulder the burden because property taxes are levied on all existing property owners."
This appears to be in contrast with the plaintiff's assertion in the Aug. 2 letter that "the city's approach is that it shifts the entire burden onto new home builders."
Peebles added, "The city of Sun Valley adopted Ordinance 364 (the Workforce Housing Linkage Ordinance) only after engaging in a comprehensive evaluation. Ordinance 364 was the product of numerous public hearings, workshops, studies and public input."
In addition, Peebles contended that the city does have the constitutional authority to instill, "exactions" (the requirement to provide workforce housing when building new structures) as a means of alleviating the impact of new development and that "fees in lieu of exactions are permissible."
As it stands, the plaintiffs have made a motion for summary judgement—a final binding decision made by a judge when the judge deems the facts of the case are so clear a trial is unnecessary. The case could go one of three ways: a summary judgement in favor of the Schaefers, a summary judgment in favor of the city, or a judge could decide a trial is necessary, and arguments would begin anew.
Hailey 5th District Judge Robert J. Elgee is expected to make a decision by late spring or early summer 2007. A hearing is scheduled for May 3.
NILS RIBI
