Boise city council member sues Ketchum over affordable housing development fees

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Boise City Council member Scot Ludwig has sued the city of Ketchum over the affordable housing fees the city charges for development projects that exceed a certain size.

Ludwig got a charge of $840,000 from Ketchum in community housing in lieu of fees for his proposed three-story, 37,000-square-foot, condo-and-retail project at the corner of First Avenue and Fourth Street in downtown Ketchum. Ludwig, an attorney, is also a developer.

Ketchum’s floor area ratios and community housing ordinance enacted in 2006 decrees that developments within the community core district must build or pay a community housing fee if the project’s floor space exceeds the property’s square footage.

Ludwig’s property measures 16,500 square feet. His project has twice the square footage of his property. He has the option to deed-restrict 20 percent of this project as community housing or pay the $840,000 fee.

“I would do affordable housing at no profit to myself, but it’s an illegal tax,” said Ludwig, who filed suit Jan. 27. “It allocates the responsibility of affordable housing on individual property owners instead of the whole community, which is wrong.”

Ludwig cites two 2008 precedents in McCall and Sun Valley, where a judge threw out affordable housing ordinances because they amounted to an illegal tax. He said several Wood River Valley developers privately support him but haven’t wanted to challenge the Ketchum law themselves.

“My goal is to get the Idaho Supreme Court to tell us what we can and can’t do,” Ludwig said. “Is it an illegal tax or not?”

The city of Ketchum declined to answer questions from the Idaho Business Review, citing pending litigation.

“The city is in the course of reviewing the case and preparing a response and cannot comment at this time,” said Nampa attorney Matthew Johnson, a Nampa attorney at White Peterson who is representing the city of Ketchum.

Ludwig brought the case through a company called Asset Enhancement that he set up to develop the Ketchum property that he acquired through a foreclosure sale in September. He proposes about 20 “second home-type” condos, underground parking and a street-level art gallery.

“I knew about the ordinance and knew I would attack it,” said Ludwig, who opened a law office in Ketchum a year ago.

Ludwig alleges that the city’s ordinance takes private property without just compensation. He acknowledges that cities impose impact fees but he said affordable housing is not an authorized impact fee.

“My goal is three-fold,” he said. “I’m reducing taxes. I’m promoting economic development. I’m supporting private property rights.”

Ludwig gave Ketchum 60 days to respond.