Whitefish City Council last week struck a compromise with the developer of the Alta Views subdivision to pay a fee in lieu of affordable housing.

Following discussion on the issue, Council in a split vote of 5-1 agreed to accept the fee in two parts with interest. Councilor Steve Qunell voted against.

Mark Panissidi is developing the 166-lot townhouse housing development off JP Road.

Under the agreement, which will still have to be approved by both parties, Council said it would allow for the $249,000 due to be split in two payments made by the end of December and the other by June 2021 with a “reasonable” interest rate.

Councilor Andy Feury said a payment schedule is acceptable for the fee as long as interest is charged.

“If we’re being asked to be a bank then let’s act like a bank and charge interest,” he said.

Councilor Steve Qunell said the money should be paid now rather than later.

“The impacts of this development are already there [in terms of affordable housing],” he said. “This doesn’t set a good precedent.”

A motion to forgive the interest if the fee is paid in full by the deadline didn’t pass.

Panissidi told Council sales in Alta Views have suffered as a result of the COVID-19 pandemic. He said only two townhomes were sold between January and May of this year, but in June and July there have been 13 sales.

“We’re very optimistic that if sales keep happening we will be able to pay the fee sooner,” he said. “We know we owe the money and we intend to pay it. We also have to pay the bank too. We’re trying to catch back up on our construction loans.”

In a letter to Council regarding the issue attorney Jay Johnson said currently the buyers of townhomes in Alta View are investors looking to purchase second homes and they have not been interested in the entry level units that are currently available for sale. Those who are interested in the entry level units “targeted to the Whitefish workforce” have been unable to qualify for loans, he noted.

Councilor Rebecca Norton said Alta Views should be allowed an extension worrying that if the project were to be abandoned then the city wouldn’t see any of the fee.

“This is an unprecedented time and we have to give some grace to the situation,” she said.

Council in April 2019 approved a plan that required Alta Views to pay $498,000 in two installments to the city. The developer made the first payment in 2019, but with the second due at the end of July, the developer sent a letter to the city asking to delay payment for another year.

At its July 20 meeting Council rejected an outright extension of the agreement that would have delayed the final payment for another year, as requested by the developer. At that meeting, Council said it would entertain a request for an extension if it included a payment plan.

The city has committed the funds from the Alta Views fee for use by the Whitefish Housing Authority to develop an affordable housing project on the snow lot.

City Manager Dana Smith said as long as the city receives the total payment from Alta View by June 31, 2021, the city could cover the funds temporarily for use on the snow lot.

As part of the 2018 agreement approving the Alta Views, the developer agreed to produce 10 affordable deed-restricted units. However, later that agreement was changed to provide payment of the fee instead of the units, as agreed upon by the Whitefish Housing Authority who said the cash would make more sense for the city.