City of Sandpoint v. Independent Highway District, 384 P.3d 368

In 2003 the City of Sandpoint and the Independent Highway District (IHD) entered a Stipulation and a Joint Powers Agreement (JPA) settling litigation: the City would exercise exclusive supervisory authority over streets inside city limits and IHD would pay the City all ad valorem property taxes collected on property within the city.
For ten years IHD complied, transferring its tax receipts to the City. In 2013 a new IHD board unilaterally ceased payments and attempted to terminate the JPA.
The City sued for breach, declaratory relief upholding the JPA, and injunctive relief requiring IHD to comply and transfer withheld taxes. The district court granted summary judgment to the City.
On appeal IHD argued the JPA violated the Idaho Constitution (creating an unlawful long-term indebtedness), failed statutory joint-powers requirements, conflicted with Idaho Code section 40-801’s tax division, was perpetual and void for lack of consideration.
The Idaho Supreme Court declined to reach the constitutional claim and held the JPA void because it improperly divested IHD of statutorily imposed duties to maintain and improve streets and failed to satisfy mandatory joint-powers statutory requirements.

Issue	Plaintiff's Argument (City)	Defendant's Argument (IHD)	Held
Validity of JPA under joint-powers statute (I.C. §67-2328)	JPA is a lawful cooperative agreement settling prior litigation	JPA fails §67-2328(c),(d): no separate entity, no administrator/joint board, lacks duration	Held: JPA invalid under §67-2328 because it creates no administering entity and purports to relieve IHD of statutory duties, violating §67-2328(d)(3)
Whether JPA unlawfully divests IHD of statutory duty to maintain city streets (Title 40)	Settlement transferred supervisory control to City and tax revenues to fund streets	Transfer impermissibly relieves IHD of statutory maintenance obligations imposed by Title 40	Held: JPA void as contrary to statutory scheme; IHD remains responsible for streets unless lawfully terminated under statute
Enforceability of tax-transfer provisions	City: IHD’s long compliance and settlement make tax transfers enforceable	IHD: constitutional and statutory defects render transfers void/unenforceable	Held: Because JPA is void, tax-transfer provisions cannot be enforced and withheld taxes need not be remitted under the invalid agreement
Judicial estoppel based on IHD’s prior performance	City: IHD acted inconsistently and is estopped from asserting illegality	IHD: Agreement illegal; illegality prevents estoppel	Held: No estoppel—parties cannot be estopped from asserting a contract is illegal or beyond municipal power (contract void for illegality)

Golub v. Kirk-Hughes Dev., LLC, 158 Idaho 73 (cited for summary judgment standard)
Mullinix v. Killgore’s Salmon River Fruit Co., 158 Idaho 269 (principle avoiding unnecessary constitutional rulings)
Trees v. Kersey, 138 Idaho 3 (doctrine that courts must consider illegality even if not squarely raised)
Roberts v. Transp. Dep’t, 121 Idaho 727 (agencies/subdivisions cannot subvert statutory duties by contract)
City of Sandpoint v. Sandpoint Ind. Hwy. Dist., 126 Idaho 145 (Sandpoint I) (scope of highway district supervisory authority vs. city street department)
City of Sandpoint v. Sandpoint Ind. Hwy. Dist., 139 Idaho 65 (Sandpoint III) (city cannot obtain jurisdiction over streets within highway district except by lawful statutory termination)
Deer Creek Hwy. Dist. v. Doumecq Hwy. Dist., 37 Idaho 601 (illegal contracts cannot give rise to estoppel)