Court busts up streets agreement

SANDPOINT — The Idaho Supreme Court is jackhammering an agreement that gave the city of Sandpoint control over its streets and tax revenue collected for maintenance.

The high court issued a unanimous opinion Tuesday which holds that a 13-year-old joint powers agreement between the city and the Independent Highway District violates state law.

The two entities entered into the agreement in 2003 in a bid to settle litigation over control of city streets. The pact gave the city control of its streets in exchange for ad velorum taxes collected on property within city limits.

After operating under the agreement for a decade, the highway district determined that the agreement was legally invalid and advised the city in 2013 that it would no longer pay its share of property taxes to the city.

The city sued for breach of contract, but the highway district countered that the joint powers agreement violated the Idaho Constitution because turning over the tax revenue a amounted to long-term indebtedness or liability that exceeded its yearly revenues, a scenario which requires approval of two-thirds of qualified voters.

First District Judge John T. Mitchell ruled in favor of the city in 2014. Mitchell held that the agreement was valid and ordered the highway district to fork over tax revenue it collected within the city.

But supreme court Chief Justice Jim Jones ruled that state law is clear that highway districts must improve and maintain roadways within their respective jurisdictions. AS a result, the highway cannot abdicate its statutory responsibility.

Jones pointed to several code sections which permit cities to enter into agreements with highway districts, counties and the state provided those pacts adhere with specific requirements of Idaho law.

“Those entities are authorized to enter into a joint powers agreement to share the duties and to share the cost of carrying out those duties,” Jones said in the nine-page opinion. “However, what they cannot do is agree that the highway district will completely turn over its statutory duty to a city, along with its share of ad valorem property tax revenues.”

Justices Daniel Eismann, Roger Burdick, Warren Jones and Joel Horton concurred, according to the opinion.

“We remand the case to the district court in the event court assistance is necessary to unwind the relationship between the parties,” Jones concluded.