Whitefish City Council on Monday chose to accept cash payment instead of requiring the developer of the Alta Views subdivision to deed 10 affordable housing units to the city.

Mark Panissidi is developing the 166-lot townhouse housing development off JP Road that has been advertised as affordable workforce housing. As part of the 2018 agreement with the city approving the project, he agreed to produce 10 affordable deed-restricted units.

However, Panissidi recently approached the city asking to amend the agreement to instead provide cash in lieu of those units. The original agreement called for five of the units to be sold for $240,000 each, and five at $250,000 each.

The Whitefish Housing Authority said it found the original 2018 agreement with Alta Views “problematic” and it would prefer cash to the units.

Council unanimously voted to accept $498,000 paid in two installments to the city instead of the housing units

Councilor Katie Williams said the cash payment made more sense for the city.

“We’re pushing for the creation of affordable units,” she said. “But in this case it wouldn’t pencil out and we would get a better product with the money rather than having the units.”

Panissidi, in a letter to the city, recently proposed paying a fee of $450,000 instead for the units upon the sale of the units of the affordable units.

However, City Attorney Angela Jacobs in speaking with the Planning Department determined that the cash in lieu should be based upon what would have been required of the original developer at the time of the original planned unit development overlay approval in 2005. The agreement then set the cash-in-lieu fee at $3,000 per unit for the total development. Panissidi revived and amended a project that had been previously planned for the site known has Deer Creek.

The 166 lots being created by Alta Views would work out to a fee of $498,000 based upon that and Planning Director Dave Taylor recommended to Council that the fee be set at that amount.

Council agreed that the fee be based upon the formula in the original ordinance approving the PUD and any change to that could set an unfavorable precedent for the future.

“We set the formula and we need to stick to that number,” said Williams. “We will not negotiate that figure.”

Panissidi was not at the meeting because he was out of town, according to City Manager Adam Hammatt, and asked that Council move forward with a decision even though he could not attend.

“I know he did not like the idea of paying the extra $48,000, but said he would consider what Council’s decision was,” Hammatt noted.

Whitefish Housing Authority Board Chairman Ben Davis explained the housing board’s reasoning for accepting cash rather than the units. Davis said that when creating the city’s planned inclusionary zoning program, which has not yet been adopted by the city, it was decided to have a price cap for all affordable units at 80 percent of the market value of the units.

“This is an important safety measure relating to the deed restrictions which are placed on them,” Davis said in a letter. “The purchaser of one of these units is sacrificing certain financial opportunities in exchange for purchasing a discounted unit.”

The Housing Authority recently obtained an appraisal for one of the Alta Views townhomes and the value came out at $285,000, Davis noted, using an average of the sales price agreed to with the developer of $245,000, the sales price reflects about 86 percent of market value.

Under the proposed inclusionary zoning program, the sales price of the units would be capped at $228,000, but because Alta Views was not passed under the program the agreement can’t been amended to reflect that.

“The Housing Authority believes that while we very much would like to have affordable housing units, with the current agreement in place our community would receive a greater benefit by allowing the developer to pay a cash-in-lieu of providing the 10 units,” Davis said. “Put simply, we believe it would be better to have five units at a lower price point than 10 units at a marginal price point. Cash-in-lieu would allow the housing authority to deploy the funds to better effect.”