SANDPOINT — The Planning and Zoning Commission granted the Averill Hospitality Group a one-year extension for its conditional use permit and associated variance for its projected resort at City Beach last Tuesday, June 16.

Averill Hospitality previously received an extension to their CUP on June 18, 2024, after they were unable to secure a building permit within its one-year expiration.

With its CUP set to expire this summer, the company returned to the commission seeking an additional extension. This marks the group's second request to extend the CUP and its third year into the project.

After giving the commission a brief staff report, Bill Dean, Sandpoint's city planner, said the code in the original CUP does not provide a “tremendous amount of specific things to consider when evaluating a request for continuance."

"Basically, the Sandpoint City Code states that the permit shall be 'diligently pursued,' " Dean said.

To decide whether or not to grant the group another CUP extension, commissioners would need to evaluate whether the project has been diligently pursued, Dean explained.

Dean presented the commission with facts of the group's permit history, including that the company applied for a demolition permit last fall, which they let expire in May. It also applied for a building permit last December, which will expire on June 29.

"They submitted the actual documents but didn't pay the plan check fee, which would initiate the review. That's a substantial fee, it's over $200,000 in plan check fees," Dean said of the building permit application.

In August 2025, Ben McGrann, a representative for Averill Hospitality, told the Sandpoint City Council that the project would not be able to sustain a proposed increase to development impact fees. As a result, the council voted to approve the project's fee schedule without changes. 

The company submitted a building permit to the city on Dec. 29, 2025, which would allow it to pay the significantly lower 2025 development impact fees for the project. Should the permit application expire, Averill Hospitality would be subject to the updated, higher, impact fees.

Commissioner Wayne Benner raised concerns about the group claiming to work on the project yet asking for continuous extensions.

"Can this go on in perpetuity?" Benner asked.

Dean explained that because cities are dynamic, permits have time limits, adding that it is in the city’s interest to be responsive to ever-changing community value expressions.

“We’re constantly touching base with the public. We’re amending plans, sometimes amending zoning ordinances, things of that nature," Dean said.

As a result, Dean said it is common to see permits with a short life extended.

McGrann spoke with the committee about progress that has been made on the resort and the extension request.

He explained that moving forward with the project is not as simple as it may seem.

“There is a lot of components that we are trying to pull together as it relates to design, construction pricing, the market, the hospitality market, the world that we live in and everything,” McGrann said.

McGrann showcased key accomplishments toward building the resort starting from July 2025, a few of which included the completion and submission of permit level drawings, continued coordination with TVA Architects, engineers and consultants, and a total of $1.8 million spent on design, engineering, studies and assessments.

“I think that all of these items show that we have diligently pursued the project and that we have made progress that is required by the conditional use permit,” McGrann said.

McGrann also addressed the group's need for additional time on the project, listing the construction cost escalation and challenging financing and capital markets as contributing factors.

He described the project as a big puzzle they are trying to pull the pieces together for, adding that further conditions to the CUP would make it "another piece of the puzzle that we have to figure out."

“Our goal remains to provide a high-quality development to the city of Sandpoint that provides tax benefits, economic benefits, and is an engine for the economic tourism economy that we have,” McGrann said.

Although the commission showed a desire to see the project come to fruition, some expressed hesitancy toward approving an extension.

Commissioner Scott Torpie placed emphasis on the act of diligent pursuit, sharing he would like to see the group pay the plan check fee for the building permit before its expiration, adding that it gives "heft to your desire to see this project through."

The majority of the commission voted to grant the Averill Hospitality Group a second one-year CUP extension, but advised if a third extension was requested, there would be conditions put into place.

"Hopefully the next time we see you guys, we're doing a groundbreaking ceremony," said McGrann.