The threat of a lawsuit has prompted the Whitefish City Council to postpone its decision on a request for a rooftop hot tub at the Firebrand Hotel.

The rooftop hot-tub proposal has become a hot-button issue between city officials and the developers of the downtown hotel that opened in August. Whitefish Zoning Administrator David Taylor and the Board of Adjustment both denied the rooftop location. The Planning Board and city planning staff also have recommended the hot tub not be allowed on the roof. Neighbors have repeatedly voiced concerns over the potential noise of such an outdoor amenity.

Missoula attorney William VanCanagan sent a letter to the city on Nov. 2, explaining the hotel developer’s legal position and putting the city on alert that Montana Development Group “has claims against the city for substantial monetary damages.”

Montana Development Group includes members of the Averill family that also own The Lodge at Whitefish Lake. The developer also is known as Whitefish Hotel Group and Averill Hospitality.

Following a public hearing on Nov. 7, the City Council unanimously voted to continue the hearing and a decision until the Nov. 21 meeting in light of the legal advisory. Whitefish City Attorney Angela Jacobs was absent from the meeting and council members want to confer with her before proceeding.

The potential legal dispute revolves around the conditional-use permit the city required for the hotel project. VanCanagan alleged Whitefish Planning Director Dave Taylor, via an email exchange, led the Averills to believe a conditional-use permit would not be required unless the hotel exceeded 15,000 square feet because it was outside the Old Town Central District.

In September 2014 the city learned the developer wanted to construct a “flagship,” or brand name hotel on the property at the corner of Second Street and Spokane Avenue. When a certified land planner asked Taylor about any regulations that would preclude the Averills from partnering with a name brand hotel company, Taylor advised them city code did not contain any “formula/chain restrictions” that would apply to the hotel, according to VanCanagan.

“Then, just a couple of months later, Mr. Taylor completely altered his position,” he stated, by concluding Block 46, the hotel site, was within the Old Town Central District.

“Not only did Mr. Taylor recant his prior representations to our client, but his analysis is wrong,” VanCanagan asserted, pointing out that Taylor altered his position after the Averills closed on the property purchase.

When the dispute first came to a head in 2014, the Averills hesitantly elected to go through the conditional-use process in order to mitigate costs and avoid significant delays association with any litigation, the letter notes.

“At that time, the city recognized that Montana Development Group probably would prevail in court but also pointed out that obtaining a favorable ruling would likely take many years,” VanCanagan said. “Our client therefore agreed to apply for a conditional-use permit despite having no obligation to do so. ... Beyond subjecting itself to the burdensome and costly conditional-use permit process, our client also agreed to cut ties with the Marriott and instead to construct a non-chain/formula hotel.”

The council codefied the Averills’ offer of dropping the name-brand affiliation by including in the conditions of approval that the Firebrand could not operate as a franchise, nor could any retail shop or restaurant inside the hotel be a franchise.

The city’s alleged misrepresentations cost the developers about $3 million, he added.

Brian and Sean Averill testified at the Nov. 7 public hearing.

Sean Averill pointed out how a downtown hotel has been part of the downtown master plan for years. The site sat vacant for a long time because of the financial difficulties in putting together such a hotel project.

“We can’t have a flag hotel; now we don’t have the amenities to make a boutique hotel successful,” Sean Averill said. He further noted they built only on the 19 commercial lots in Block 46.

“With the zoning you could legally have 19 buildings with hot tubs on the roofs of all of them,” he said.

Brian Averill talked about a sound engineering study done to determine if the noise from a rooftop hot tub would affect the neighboring residential homes. The study tested noise levels in the normal range and at a rock concert level. It was determined the noise barriers the hotel would put in place on the roof would absorb even the higher level of noise.

The hotel group proposes to enclose the hot tub with a 5-foot glass wall on two sides and an 8-foot tall wood fence on two sides to reduce noise in the residential areas surrounding the hotel. The hot tub would be in the northwest corner of the roof, on the north side of the hotel, and would be available only to hotel guests with a key card by either the elevators or stairs.

A consulting company hired by the Averills noted that an outdoor hot tub is typically ranked as the most important amenity of a hotel in a ski town, and that without one the hotel could expect about 20 percent less revenue.

Brian Averill noted the economic impact of the Firebrand on downtown Whitefish. The hotel is expected to bring in $26.5 million that would be spent in the community on an annual basis.

Features editor Lynnette Hintze may be reached at 758-4421 or by email at lhintze@dailyinterlake.com.