SANDPOINT — Averill Hospitality’s Ben McGrann told the Sandpoint City Council Wednesday that the company's 56 Bridge St. hotel plan cannot sustain the proposed increase to the city’s development impact fees.

Sandpoint’s increases are currently scheduled to take effect in October, increasing the amount of the fees paid by Averill Hospitality by around $1 million. The building permits for the hotel, when Averill would have to pay the DIFs, will not be ready until early 2026, according to McGrann. 

"At the proposed $7,703 per room, a 105% increase, this project is simply unviable,” McGrann said. “Yes, a project on this scale faces a demand on infrastructure, but the long-term benefits far exceed the short-term cost.” 

Sandpoint Mayor Jeremy Grimm said that the council can still change when the impact fees take effect. He said this would take place at the council's Sept. 3 meeting, when the changes to the city ordinance are adopted. 

McGrann asked the council to either delay or grandfather in projects that have currently issued conditional use permits, to save the current plan. He said that the hotel is expected to bring in between $12-17 million in occupancy tax fees and $80-100 million per year in guest spending to the city once it’s constructed. 

Bill Dean, Sandpoint’s city planner, said he was against the concept of grandfathering in projects because CUPs can be extended and expire. He advised the council to instead set a concrete date later in the year to avoid potential legal issues with grandfathering in the fees.  

“My recommendation would be to pick a date that’s fairly near to where we are today,” Dean said. “I heard January for the permits, great! How about at the end of January?” 

Grimm suggested that Averill Hospitality could approach the Sandpoint Urban Renewal Agency, an independent public redevelopment agency focused on downtown and northern Sandpoint, to see if it is interested in helping pay some of the DIFs owed by Averill Hospitality.  

Most councilors expressed concern over the fees’ effect on the hotel and how that would impact downtown Sandpoint.  

“I understand the necessity of the impact fee increases ... that is a project that I think we all want to see come to fruition,” Councilor Rick Howarth said. “I cannot in good conscience approve the implementation of those fees, without understanding there wouldn’t be a negative impact."

After discussion that also included consideration on the maximum parking pass fee, the City Council voted 3-3, with Grimm breaking the tie by voting in favor to approve the fee schedule without changes. Councilors Rick Howarth, Joel Aispuro and Pam Duquette dissented while Kyle Schreiber, Justin Dick and Deb Ruehle voted in favor. 

"Your ordinance adoption is forthcoming, there are more ways to delay the adoption,” Grimm said. “I believe you can move forward with these fees and still have a second bite at the apple when it comes to the impact fees.” 

In a similar vote, the City Council voted 4-3, with Grimm being the tie-breaking vote, to adopt the maximum recommended impact fees to the city’s 2026 fee schedule July 13. The council was split between the maximum or taking a phased approach but opted for the full amount. 

The development impact fee ordinance will come before the City Council on Sept. 3, where they can make changes to its implementation. That meeting will be held at 5:30 p.m. at City Hall.