Litehouse zone change denied

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SANDPOINT — Sandpoint City Council denied Litehouse Inc.’s proposal to change the zoning on a site it owns from industrial to multi-family zoning was denied Wednesday.

The council denied the change, saying the city has not yet done a land use study, which would inform council on how much industrial, commercial and residential land is needed in city limits in the next 20 years.

In moving to deny the request, Councilman Joel Aispuro said Litehouse had not provided the necessary information to defend its claim more land needed to be zoned as residential rather than industrial in proximity to the airport. That land must be needed for industrial growth and expansion.

Litehouse did not respond after the motion denying the zone change passed.

Under the request, the property at the southeast corner of Woodland Drive and Great Northern Road and west of the Sandpoint Airport would go from industrial to residential multi-family. The application was heard by the Sandpoint Planning & Zoning Commission on Oct. 5.

The commission recommended to the council to approve the zone change with the condition that a development agreement include some language on workforce housing as part of the agreement due to the need of housing and since the proposed context area 3 for multi-family housing in a 3-1 vote.

The goal of the zone change is to allow for the construction of housing on the industrial zoned property. Sandpoint and Idaho Code require the zone changes to be consistent with the comprehensive plan land use map; the map must be amended for the zone change to be approved.

Litehouse had originally bought the land for another manufacturing site, said CEO Kelly Prior. From a manufacturing point of view, he said that if Litehouse was first coming to Sandpoint at this time it would not qualify for a manufacturing location and still be competitive due to the housing issues.

According to its application, city’s staff said Litehouse officials indicated that the proposed change in zoning is to address a workforce housing shortage by developing the property with multi-family housing.

Jeremy Grimm with Whiskey Rock Planning and Consulting first present on the behalf of Litehouse to the planning and zoning commissioners at the Oct. 6 meeting. Grimm said that there would still be plenty of land for industrial use. He provided data on the 137 acres that, on average, there are 146 employees per acre of industrial zoning in Sandpoint.

Grimm addressed the comprehensive plan which projected a 2.5% growth rate for the city. At that rate 100 housing units would have to be built every year. In the past three years instead of building 300 housing units only 120 have been built.

Per the U.S Census Bureau in 2019, 57% of Sandpoint renters are paying more than 30% of their income in rent, said Grimm. 37% of homeowners are paying more than 30% of their income in housing costs.

“If we lose employees, we lose business and we will become Jackson Hole,” said Grimm.

On the top of age and income restricted housing that is near the airport, Grimm advises against it saying that employees have had to turn down raises since it would disqualify them for their living arrangements. He said that this has happened before.

He compared the housing and industry balance to the “chicken and egg conundrum.” Housing begets workers which allows industry to grow, said Grimm. He pointed to Post Falls mass increase of housing and its increase of industry over the past few years.

During the planning and zoning commission public comment a few spoke positively on developing housing on the land in hopes it would help solve the housing issues. Others cautioned on pushing this through without a development agreement. One resident feared that more housing would not necessarily mean locals would be provided housing. He said that incoming buyers would still result in exorbitantly priced houses.

“Three of the largest employers in Sandpoint wrote in support of this,” said Chairman Jason Welker.

He said he was in favor of a development agreement and didn’t say that the developer should be concerned about this. Welker went on to say that housing demand is growing faster than supply at an unprecedented rate in the last year and a half. The urgency might be on the supplier’s part to capitalize on the record demand of the last year, said Welker.

He said that they need to slow down and make sure this zone change will develop the community and not just the urgency of the developer to cash in while the market is hot. Our workforce is those who work at Lake Pend Oreille School District, Litehouse and those who work at Bonner General, not the remote workers, investors, speculators or seasonal residents that have been recently available housing, said Welker.

Grimm returned to the city council meeting on Nov. 3 and said that the Litehouse land is an ideal geographic location for housing and easily served with infrastructure and is close to services. He said that his clients are opposed to a development agreement. He suggested that the council just change the zoning.

Prior said at the city council meeting that several of their employees have lost their housing due to landlords raising prices and making it unaffordable for staff to stay.

“We currently have 256 open positions that we have not been able to fill in a year … these open systems are limiting our production and affecting our ability to serve our customers,” said Prior.

He went on to say that Litehouse has compensated for the market by raising their way for entry level staff by 30%. Inflation is really right now, he said. This isn’t a silver bullet to solve all issues, but it can help, said Prior.

He opposed the development agreement proposal saying that it will only extend the timeline, making the property unmarketable. He said that he trusted the developer and believed that he knew what would be best for the property in order to build multifamily housing.

“I am not here to threaten any action by Litehouse,” he said, “but we are going through contingency plans on what we are going to do if we can’t hire enough employees.”

He said that if this trend continues, in order to service customers, Litehouse will have to move some if not all manufacturing work to other facilities.

Once rezoned to residential multi-family, the property would be eligible for development with all land uses allowed in the RM zone which would include single-family residential.

Councilman Joel Aispuro said that the staffing issue at his family restaurant Joel’s has nothing to do with the housing issues. He said that these developments built for the local workforce that works at Litehouse or small business, but for those that have been blessed financially or have worked hard to large sums.

“They have every right to pay $100,000 over asking price,” said Aispuro. “Usually subsidy or density, for what I understand, is the solution.”

He said density is the best option for cheaper houses, but that he still believed it would only be cheaper for those moving to Sandpoint. He said that a $400,000 to $600,000 house is not “cheaper.” This is not just a Sandpoint issue, but a national issue, he said.

Grimm said that the developer will build multi-family homes on the property.

Councilman Andy Groat said that this project, though well intentioned, is nothing more than a “real estate deal.” After hearing from both sides it is agreed that this one zone change will not solve all of the housing problems, he said.

“If we put the cart before the horse, we are trading one problem for a whole other set of problems down the road,” said Groat.

He said that it is obvious that the comprehensive plan should not be amended but that the city needs to do another one. He also said that the city is six years into a master plan for the airport and is still committed to it.

Councilwoman Shannon Sherman agreed that since the city has been planning to come back to do another comprehensive plan. Councilwoman Kate McAlister also had issues making a change to the plan on the spot in regards to protecting industrial land.

City staff noted that the Comprehensive Plan Amendments are “relatively rare” as a general rule. Jurisdictions don’t favor modifying the long-term vision of the community for individual sites.

“Sometimes there is a compelling case to be made that conditions exist that the plan didn’t envision and therefore an amendment is necessary/warranted,” said city staff in a report.

The full meeting with full public comment can be viewed on the city’s YouTube channel called “City of Sandpoint.”