COEUR d’ALENE — Tyler Gabriel has been operating a permitted short-term rental near downtown Coeur d’Alene for two years.

So naturally, he wasn’t wild about the city’s proposal to increase permit fees for legally operating STRs to fund the cost of hiring a company to crack down on illegal STRs.

“The logic applied to fees is slightly flawed,” he said to the City Council during its Tuesday meeting in the Library Community Room.

Gabriel said to penalize those doing the right thing seemed counterintuitive.

“I ask you to re-examine the logic used to create the fee structure and consider applying a penalty approach to those who have not been on the up and up and rewarding those who have," he said.

After some debate, the council unanimously agreed.

It turned down increasing first-year STR permits to $369.09 from $285 and raising renewals to $180.09 from $96.

“I'm still feeling it shouldn’t be that the current permit holders pay for the non-permit holders,” said Councilwoman Kiki Miller.

The city held a public hearing Tuesday on several fee increases in different departments, including building, finance, legal, library, municipal services, parks and recreation, police, planning and water.

While most were small increases and approved, the council voted against fee hikes for STR permits, parks and recreation and legal and will revisit those areas.

Miller questioned the proposed increase for reserving city property, including the City Park bandshell and the McEuen Park pavilion, with both going to $300 from $150 for a day, while park gazebos would go to $200 from $100.

She said residents might want to reserve them for something as simple as family reunions.

“A $300 fee for a citizen of Coeur d’Alene seems like a lot,” she said.

Miller also balked at the Legal Department’s request to include fees related to administrative and appeal hearings to cover staff costs. Administrative and appeal hearings would be $500 and appeals without hearings would be $250.

"It felt like a deterrent for somebody to have their say in an appeal process,” Miller said.

City Attorney Randy Adams said they are only trying to recover a portion of the cost of a hearing, which requires considerable time and effort.

“It’s a reasonable fee, but I certainly could see some people would balk at that,” he said.

Council Dan English supported the fees.

"If you want your day in court, it’s going to cost you,” he said.

Increasing STR permit and renewal costs attracted much of the attention.

For months, the city has considered ways to crack down on unpermitted STRs. It is estimated there are between 840 and 1,200 vacation rentals in the city, with only 453 legally permitted.

Residents have complained of having too many STRs on their blocks, particularly in the downtown area, which they said negatively impact neighborhoods.

Last month, the City Council unanimously approved an agreement with Granicus, based in St. Paul, Minn., for short-term rental host compliance services for $38,093. One of its tasks is to track down names and addresses of unpermitted short-term rentals. That report is expected by March.

The city agreed to pay Granicus from the general fund, with that money being recovered next year via the increase in STR permit and renewal fees.

Miller asked if the city couldn’t have noncompliant STRs share the cost.

“It feels like it will be a little bit more work, but I feel like it’s not very fair to charge the short-term rental folks who have done the right thing,” she said.

The city has an estimated 600 to 800 nonpermitted STRs.

The fine is up to $100 a day for operating an STR without a permit.

"How many fines have we actually given out for an unpermitted STR?” asked Councilman Dan Gookin.

The answer was zero. Only warnings have been given out.

Renata McLeod, municipal services director, said that when someone operating an illegal STR is notified by the city, they generally come in the next day to get legal.

"We haven’t had anybody that’s refused to come and pay after they've been warned," she said.

Gookin questioned if the city could fund the Granicus contact through penalties for those operating without an STR permit.

"It’s a trickier methodology, that’s for sure,” said Hilary Patterson, community planning director.

Councilman Woody McEvers said as it stands, someone caught operating an illegal STR is let off without even a slap on the wrist.

"If we find out you're not playing right and fair, you just get to join the club? Does that seem fair?” he asked.

Mayor Jim Hammond recommended, and the council agreed, that the city wait until it has more hard STR information from Granicus and proceed from there.