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Idaho city cites property tax law, halts growth for months

| May 18, 2021 12:00 PM

CALDWELL, Idaho (AP) — The quickly growing southwestern Idaho city of Caldwell is stopping all new residential development for four months because city leaders say a new property tax law could put its citizens in “imminent peril” by straining public safety service. Officials say other cities are considering similar moves.

Idaho Gov. Brad Little signed the property tax bill into law last week. The bill restricts city governments to recognizing only a percentage of new development in taxing districts rather than the full amount; gives big new property tax breaks to businesses and developers; increases the homeowner’s property tax exemption by 25%; caps local government property tax budget growth at 8%; and includes other provisions. Lawmakers pushed the bill through in three days just before the session ended.

City leaders often seek to have “growth pay for growth,” attempting to capture 100% of the taxable value of new developments so existing residents aren’t unduly burdened in paying for the expanded public safety services needed to accommodate new residents.

Under the new law, either growth will be curtailed or services will be compromised, said Kelley Packer, executive director of the Association of Idaho Cities.

“This is not a threat. It’s got to be one or the other,” Packer said. “We can’t just grow if we can’t cover the service needs of that growth. And if we do, then service will be negatively impacted — it’s just one or the other.”

Packer said Caldwell isn’t alone in considering halting growth. Emmett, Rathdrum, Nampa, Kuna, Star and other Idaho towns are also looking closely at what the impact of the new law will be.

Caldwell grew by roughly 26% between 2010 and 2019, and it’s one of several cities in the region already facing a housing deficit.

City attorney Douglas Waterman said the moratorium on new residential development will give the city time to develop a budget that ensures city services can meet the needs of future residents.

“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.

Some developers say the moratorium will make the already climbing home values in the region increase even more, exacerbating a housing crisis.

“I suggest you do not make the same mistake that the governor made when he signed this,” said Tim Mokwa, a development manager for Hayden Homes who had 57 residential lots approved earlier in the meeting. “You guys inherited a very difficult situation. I just suggest you don’t jump into what you think is a solution too early.”