The Whitefish City Council voted unanimously Monday to close a "loophole" in the city's Legacy Homes program that has allowed developers to build up to seven units in multifamily housing projects without triggering affordability requirements.

The council launched the Legacy Homes program in July 2019 in an effort to ensure some homes remain affordable to the Whitefish workforce. The program works by placing restrictive covenants on certain projects built in high-density residential zones and tying those home prices to the county's median income, a system known as inclusionary zoning.

The council lowered the number of units a developer must build to trigger the deed restrictions and the need for a conditional-use permit, from eight units to five.

A memo from council member Ben Davis, who chairs the city's Strategic Housing Plan Steering Committee, indicates developers may be deliberately avoiding the affordability requirements by building only seven units. The committee, Davis wrote, has identified three seven-unit projects "where a better project and more efficient use of the land may have been a different design."

Davis said lowering the unit threshold will capture more projects in the Legacy Homes program and remove an incentive for developers to tweak their construction plans.

"The housing program itself is only going to be as good as its largest loophole," he said. "We're allowing those projects to be built without any contribution to affordable housing, whereas in many other areas, with many other projects that are much smaller with far less resources, we are requiring it. I don't find that to be equitable.

"It's important that the projects that are proposed are the best possible projects," Davis added.

Council member Rebecca Norton said the change will help "make sure we're getting the right size of building in the right part of town."

The council's move met resistance from city planning staff who argued, in part, that it's too early to make significant changes 18 months into the Legacy Homes program. Only one project has been planned under the program so far; planning staff said it could take three to five years to see results.

The city's Planning Board also recommended lowering the unit threshold to five. Council member Steve Qunell said the change could make the Legacy Homes program more effective.

"We're trying the best we can, and we don't know what the right formula is to get affordable housing," Qunell said. "And this seems like the next best step, but it is not a guarantee that it's going to do any of the things that we expect, that we would like it to do."

Reporter Chad Sokol can be reached at 758-4434 or csokol@dailyinterlake.com