Idaho legislators have taken a step they hope will lead to lower housing prices.
"You know, it's simple supply and demand, so if supply is increased, then more people can buy a home. And I think that's where the legislature's focus is," said Coeur d’Alene land use attorney Peter Smith.
On July 1, a new law took effect that aims to increase the supply of land eligible for homebuilding.
Peter Smith: It's an attempt by the state to limit cities' ability to mandate that lot sizes be of a certain square footage. What they want to do is they want to be able to tell cities, if you have a subdivision of more than four acres, you cannot mandate that lots have to be bigger than 1,500 square feet. There's a lot of tension in the cities over increased population and traffic and everything else and so the state's goal is to say, if the subdivision qualifies as a starter home subdivision, that you can't mandate lots be larger than 1,500 square feet.
That will drive down the cost of the land to the developer and the future homeowner, and, in theory, it should drive down home prices.
DN: So where is the tension here, especially among the cities that want to say, hey, we want to make sure that lot sizes are a certain size?
PS: The tension is when you go in for an application for a new subdivision, people show up and say, it's going to increase traffic. We already have enough traffic. It's going to tax our infrastructure, water, sewer, stormwater. All those elements come into play.
And if you've ever attended a city council meeting when a new subdivision is proposed, about 99% of the people who show up are opposed to it for exactly those reasons. Those are the voters that elect those council members and mayor and so cities are under a lot of pressure to restrain growth.
But at the same time, as a state and a lot of people say we need more affordable housing. That's where the tension arises. You need supply to lower price.
DN: So this law went into effect on July 1. Is your law firm starting to see people ask questions about how is this going to trickle down to our city, to our neighborhood?
PS: Yes, we are. We're seeing cities already start with their draft ordinances implementing this. They have till February 1, 2027 to implement it.
We're seeing them make changes, getting a lot of calls from real estate developers who are interested in moving toward this way, and we're seeing steps by the cities to implement the law literally.
For example, they say, the statute says we can't require lots to be larger than 1,500 square feet. So we'll mandate that the minimum size can't be bigger, but also it can't be smaller than 1,500 square feet, which results in a lot being exactly 1,500 square feet.
The goal is to say, well, since we have a minimum we can't go over, we're gonna set a maximum that you can't go under and that'll just limit the ability of the developers to do those subdivisions. So we are seeing action in that direction.
They're also saying that the four-acre requirement, anything larger than four acres can qualify. They're writing ordinances that say it has to be exactly four acres.
DN: Okay, so in your professional opinion, what kind of impact is this going to have? Is this a big change, big move?
PS: We've never seen this from the state. Data's never come out and said, we are going to mandate to cities on how they deal with their residential subdivisions and lot sizes.
There's a lot of other points in the statute. For example, it talks about an exception for this requirement of 1,500 square feet and four acres, if the infrastructure of the city can't support it, and they use the word unfeasible. That's where a lot of the fight will come in as well, because the city could say, yeah, we have to live under these ordinances or the statute and our ordinances comply, but we're still not going to approve this because the infrastructure we have in the city makes it unfeasible.
So those are all questions of fact, as we call it in laws, which means you need people to testify to what that really means. That's where I think if there is a challenge, where a city denies one of these subdivisions, that a developer will come in and say the decision was just capricious and arbitrary and you're not really following the intent of the legislature here.
In addition to the way they're drafting the statutes, I think will be challenged or the ordinances, sorry, when they drafted the ordinance with the minimum square footage of 1,500 square feet and the maximum of 1,500 square feet and limiting it to just four acres.
I think the both of those will be challenged because that's not what the legislature intended.
DN: I know larger cities such as Seattle, even Spokane, are getting to more density in housing within the city limits. I assume Boise is already headed that way. But do you assume more places like Coeur d'Alene and others are going to become much more dense places, more like a traditional, let's say, eastern city?
PS: I think that's where we're headed and that's where the tension arises.
The current residents don't like that, though they want affordable housing. So there's a real conflict there. But I think we are headed to denser urban environments. We're already seeing more and more subdivisions be proposed on smaller and smaller lot sizes to increase that density. People want to live here. So they need a place to live and when they move here, they want to be able to afford it and to afford it, you got to increase the supply.
DN: And yet, at the same time, one of the reasons they want to live here is because they get their space and now we're saying you can't have the space because we need more places for people to live.
PS: Yeah, it's very interesting, right? When they first move here, they want to find some place affordable to live. But once they're here, they say, well, maybe we should close the door behind us.
I think the legislature is reacting to that vibe that's going through the cities and the public, saying, well, the voters have told us they want to have affordable housing and this is a way for us to tell cities, this is what you need to do to provide that housing.
DN: But it's clear to me, if you look at the vote, it was a 36-34 vote in the House. Democrats were aligned on one side, and it was kind of split between Republicans. So it seems to me there's still some of that cultural battle that I think we've been alluding to that may take a little while to play out.
PS: Oh, it definitely will and I think this bill will be amended in the next session, from what I'm hearing from folks, because the ambiguity that we talked about earlier exists and so it's going to spur litigation. So I think they're going to try to head that off by amending the bill. But we'll see how this all develops. It may end up in the courts.
DN: Currently in the city of the state of Idaho and north Idaho, this applies to Coeur d'Alene, a city with more than 10,000 people, Post Falls. I think Sandpoint and Rathdrum were less than 10,000 in the last census, but may have grown beyond that. Are there other cities that you can think of, Moscow, within North Idaho, that this applies to?
PS: Sandpoint is above the 10,000 limit as of July 1 of 2025. Hayden is above. Rathdrum also crested that. Rathdrum's the one that's taken the most action as to drafting a proposed ordinance to comply with the statute.
DN: So Kootenai County right now is sort of the petri dish for this particular law.
PS: It is for my focus, because that's where I'm getting the most interest in it.
DN: So is this an area of law that you specialize in? Are you going to have a lot of these? Is this going to be a lot of your work over the next few years?
PS: I do a lot of land use law. I think this is going to be a part of that for sure. It's going to be a process with the cities to see how they're going to implement this, how they're going to react to their constituencies that show up at the meetings, and whether or not what they choose to implement will be legal from the court's perspective. I think the Idaho Supreme Court may weigh in on this unless the law’s made more clear.
