Eastern Idaho Home Builders Association files lawsuit against City of Idaho Falls over impact fees

IDAHO FALLS, Idaho (KIFI) — Eastern Idaho Housing Builders Association has filed a lawsuit against the City of Idaho Falls to overturn the City's impact fee ordinance.

The organization claims the ordinance is unlawful, excessive, and detrimental to local businesses and residents by raising costs and making living and working in Idaho Falls more expensive.

The city council passed the impact fee ordinance on June 1, 2022, and then amended it in March 2023. The fees are charged on building permits and are used by the city to fund infrastructure projects, including roads, parks, public safety facilities, and more.

“These impact fees are not just a burden on developers; they have a ripple effect throughout our community,” said the EIHBA Legal Action Committee in a news release. “Higher development costs lead to increased rent prices for businesses, which then have to raise prices on goods and services. This affects everyone—from the cost of groceries and dining out to housing affordability.” 

The EIHBA said the ordinance fails to meet statutory and constitutional requirements under Idaho law. In the lawsuit they say City's studies supporting the fees are flawed, and the fees themselves are not directly tied to the actual impact of new developments.

“The impact fees are making it more expensive for new businesses to open and for existing businesses to survive,” the Committee added. “This not only affects the diversity and vibrancy of our local economy but also means higher prices for everyday essentials for our residents.” 

The City of Idaho Falls responded with a statement:  “With the City of Idaho Falls facing explosive growth there were, and continue to be, significant challenges maintaining the public’s expected level of service for public safety, roads and parks for our residents. In 2022 impact fees were adopted by the City of Idaho Falls as one of the only tools established by the Idaho Legislature to allow growth to pay for growth rather than new growth being subsidized by existing taxpayers. 

The City has great confidence in the judicial system. We intend to respond to the lawsuit from the Eastern Idaho Homebuilders Association through the proper legal channels and trust that the courts can provide a fair outcome for everyone.” 

You can read EIHBA's full news release below.

This story was updated with the city's response.