Council approves PUD amendment allowing up to 150 units at Caro Yards with 10% affordability condition

The Whitefish City Council on July 28 approved Ordinance 25-8, a planned-unit development (PUD) amendment that lets the former Idaho Timber site at 95 Caro Avenue (branded by the applicant as Caro Yards) increase residential density up to 150 units, apply the WT-3 mixed-use building-height standard across the project, and allow Lot 3 to exceed a 3,500-square-foot building footprint. The council tied the density bonus to a requirement that 10% of units be deed-restricted through the city's Legacy Homes program or a comparable housing mitigation plan.

The amendment matters because it changes the previously approved mix of uses for a 14-acre project that had long been proposed as a mixed-use neighborhood with offices, a hotel, marketplace and limited commercial uses. Planning staff and the applicant told council the site has sat largely dormant for two years; the proposed changes prioritize a larger residential component to make the project financially viable while preserving public-access amenities along the Whitefish River.

Planning Director Dave (last name not specified in the packet) summarized the PUD's history and the current amendment. He said the project began with a 2018 preliminary plat and a PUD overlay allowing mixed uses and flexible development standards; subsequent amendments added and removed live-work units, changed lot coverage and altered setbacks. The new amendment would increase the maximum approved residential units from 97 (84 residential units plus 13 live-work) to as many as 150, with the caveat that units above the underlying-zoning maximum require a 10% deed-restricted set-aside and an approved housing mitigation plan.

Aaron Wallace, the principal architect for Montana Creative representing the owner, told council the underlying developer/owner has changed and the new owner is pursuing a revised program that balances residential and hotel components. Wallace said the development team envisions two three-story buildings with internal garages and expects to deed-restrict about 14 of the units; a fifteenth affordable unit could be fulfilled by cash-in-lieu if needed. He said the applicant intends the residential component to be long-term rentals rather than short-term rentals and that parking demand under modern standards would likely be lower than under the original commercial-heavy proposal.

Speakers from the public raised questions about concurrency and enforceability of affordability, river access, setbacks and fire safety, and short-term-rental enforcement. Richard Hillner and Susie (5 Star Rentals) asked how deed-restricted units would be protected from later conversion to non-affordable uses, whether affordable units would be built concurrently with market units, and how on-site river access and parking would be managed. The applicant and staff responded that the Legacy Homes administrative procedures require deed restrictions and a housing mitigation plan, that staff can monitor short-term-rental listings, and that the project already includes public trails, river access and public parking for the adjacent Great Northern Veterans Peace Park.

Council deliberations focused on the density bonus mechanism, how to ensure affordable units are delivered rather than deferred, and how to preserve flexibility for the developer without eroding program guarantees. Councilor Norton offered a friendly amendment to condition 2 that, if the developer opts into the Legacy Homes density bonus, the deed-restricted units shall be constructed concurrently with the first phases of residential development; the amendment was seconded and passed (amendment vote recorded 3-1, with Councilor Caltabiano voting in opposition). The council then approved the amended PUD ordinance on final action; the motion as amended carried and the council voted to adopt the first-reading ordinance and associated findings and conditions.

The final approval retains the PUD's community benefits: public trails and river access, preservation of roughly 62% common open space, and provision of public parking for the adjacent park. Staff recommended two conditions of approval: (1) the project must meet all previously approved conditions for the final plat, and (2) if the project exceeds the underlying-zoning unit total (122 by staff's calculation), the developer must provide a housing mitigation plan and deed-restrict 10% of the units (or pay cash-in-lieu) under the Legacy Homes administrative procedures, with the council-amended clarification that deed-restricted units must be built in concurrency with residential phases when the Legacy Homes mechanism is used.

Council members indicated support for moving a stalled site toward construction while adding safeguards to ensure the affordability commitment is realized. The applicant said the intent is to proceed with site work this summer and begin vertical construction the following spring or summer, with two buildings on the south side likely to hold the deed-restricted units. Staff noted the project has already received many permits and approvals, and some outstanding items are expected to be completed before year-end.

Votes at a glance: The council held the public hearing and then voted to initiate discussion, adopted the PUD amendment as amended, and approved the first-reading ordinance. The council also approved the consent agenda (July 21 minutes) earlier in the meeting.

The council asked staff to retain enforcement mechanisms for short-term-rental prohibitions on non-hotel units and to ensure Legacy Homes deed restrictions are recorded and enforced before occupancy as required by the administrative procedures. The applicant agreed to work with staff and, if needed, with Whitefish Housing Authority on administration of deed restrictions.

The amended PUD moves a long-dormant mixed-use plan toward a primarily residential project while preserving riverfront access and reserving a density bonus only in exchange for deed-restricted affordable housing.