COEUR d'ALENE - In a confusing twist, the Fort Grounds Homeowners Association lost its bid to secure a special-use overlay zone to make multi-family housing more difficult to build in the historic neighborhood.

Instead they realized halfway through the meeting that the request would have eliminated muti-family housing altogether.

Ann Melbourn, Fort Grounds Homeowners Association, was the applicant for the request. She explained to the city Planning and Zoning Commission Tuesday evening that her neighborhood was overwhelmingly in support of making it more difficult for property owners to re-develop their historic homes into duplexes or condos.

She said the association started working with the city of Coeur d'Alene earlier this year to protect the historic neighborhood from becoming overrun by high-end condominium projects without having to change the zoning.

"Homeowners are concerned about the changes in the neighborhood," she said. "Many owners are concerned about the proliferation of multi-family dwellings on neighboring lots."

Last August, Melbourn said the homeowners association met to discuss several issues that had the potential to impact the neighborhood in the immediate future.

"They voted to maintain the Fort Grounds as a single-family residential neighborhood and authorized the board to pursue a special-use permit designation through the city," she said.

A variety of multi-family housing options are currently "allowed by right" land uses in the Fort Grounds neighborhood, under what is known as R-8 zoning. That means, by law, any property owner with suitable land could build multi-family housing just as easily they could build a single-family residence.

The only zone that restricts property to single-family homes is an R-3 zone, but Melbourn said only eight of the 100-plus lots in the Fort Grounds neighborhood would be compliant with that zoning code.

"So that was not an option," she told the commission.

Instead, Melbourn explained the association worked with the city to pursue a "special-use overlay zone" that would make single-family homes the only "allowed by right" use in the neighborhood.

The R-8 zone permits a variety of uses for properties in that zone. The uses are categorized in three ways: allowed by right uses, accessory uses and special uses.

"We understand that this request does not change the zoning for the neighborhood," she said. "Uses other than single-family residences would require a special use permit and neighbors would have some input in the process."

Other association members who supported the special use process went on to explain that multi-family homes could still be built in the neighborhood, but they would need to get a permit to do so.

They testified the process would require neighbors within 300 feet of the project to be notified of the special-use hearing, where they could have a say in the approval of the project.

"What we are asking for is a special-use permit so if someone wants to build multi-family housing, we and members of the neighborhood be informed of it, and be allowed to make our input to you, who would make that decision whether that special use would be allowed," said former City Councilman John Bruning, who is also a resident in the Fort Grounds. "That is all we asking for - not to outlaw it."

Just for clarification, Zoning Commissioner Peter Luttropp asked Bruning if he already owned property in the Fort Grounds, whether or not he could still go through the special use process to build a duplex or quadplex on it.

"That's correct. It would be allowed just like many other uses would be allowed, but you would have to get a special-use permit," Bruning said.

The association members were apparently confused by the process, however, assuming that all the "allowed by right" uses were being restricted instead of being eliminated all together.

Deputy City Attorney Warren Wilson stepped in to clarify that point.

"What this action will do tonight would be to shorten the list of allowed by right uses down to one use, that being single-family detached housing," he said. "That would be the only use allowed by right."

It eliminates all other uses under the allowed-by-right category rather than shifting them over to the special-use category. If passed, there would be no more multi-family housing allowed in the neighborhood, he said.

More than 80 people attended the hearing, and more than a dozen neighborhood residents spoke for nearly two hours testifying for or against the overlay zone, including Rick and Roxanne Gunther, whose multi-family townhouse project prompted the neighborhood to start the petition effort.

"If all of you are having a problem understanding what this overlay means, do you really think the 80 people who signed the petition know what they actually signed?" Roxanne Gunther asked the commission.

After the public comment period closed, commissioners deliberated and struggled to find a middle ground on the issue. Luttropp wanted to table the issue and hold a workshop to find a solution.

Commissioner Tom Messina said he understood Luttropp's concerns and even shared some of them, but felt that the homeowner's association needed to find resolution internally.

Ultimately, Messina made the motion to deny the request and the motion passed 3-1, with Luttropp casting the dissenting vote.

The issue could now be appealed to the city council by either party. City Councilman Dan Gookin said if that is the case, he will recuse himself because as a Fort Grounds resident, he testified in support of the overlay.

After the meeting, he said the association members were definitely confused by the elimination of the multi-family housing. He was under the impression that would have still been allowed under the special-use category.

He also believes the city council was under the same impression when members voted unanimously last month to reduce the threshold the Fort Grounds Homeowners Association needed to bring the issue to a public hearing before the zoning commission.

"Yes, I think we were all under that impression," he said, adding he thinks the issue is likely to be appealed.