SARANAC LAKE – Debate over a Lake Flower hotel resort continues to swirl around a property across the street that is no longer part of the proposed 93-room, four-story hotel.

More than a year after the village Board of Trustees created a new zoning district for the project, it will “clarify” its decision to include 203 River St. in that district at its meeting Monday, village attorney Janelle LaVigne announced at a village Planning Board meeting Tuesday night.

The move comes as opponents of the project say removal of the property from the current resort plan requires Saranac Lake Resort LLC to submit a new Planned Unit Development District application to the village, which would be a major setback for the so-far-unnamed developers.

The complications created by removal of 203 River St. shouldn’t be anything new to village officials. They were warned about them months ago by a law firm the village hired to review the proposed resort.

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“Confidential” memo

203 River St. is next to North Country Community College’s River Street Hall and has a vacant two-story house. Chris LaBarge and Lake Flower Lodging, who initially were behind the resort, planned to convert the property into an off-site parking lot for the project, and it was included in the Lake Flower PUDD. The new developers dropped plans to acquire 203 River St. after determining they’ll have enough parking, 100 spaces, on the shoreline properties where the hotel would be built.

In a memo submitted to the Planning Board in December of last year, Glens Falls-based Miller, Mannix, Schachner and Hafner advised that if 203 River St. is removed as a parking area for the project, the applicant should ask the village for a variance or an amendment to the PUDD. Otherwise, the law firm advised, any subsequent approvals could result in a challenge that would have “a fairly strong legal position” since the village board had specifically included 203 River St. in the PUDD for off-site parking.

The special counsel’s memo was stamped “confidential” but was left in the project’s public file, apparently by mistake, for an unknown period of time. The village has since pulled the memo from the file. However, a person who read it before then, and who wished to remain anonymous, described it to the Enterprise.

Village Community Development Director Jeremy Evans confirmed the substance of the memo but declined to let the Enterprise see it, citing attorney-client privilege. He said the special counsel’s advice was just that.

“It was by no means, ‘You have to do this,'” Evans said, describing it as a “conservative recommendation” to protect the village from a potential lawsuit.

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“Most palatable” option

LaVigne, who was hired in March as the village’s attorney, said Tuesday that the “most palatable” way to address the issue of 203 River St. is for the village board to outline “what the intent was” when it included it in the Lake Flower PUDD.

“It’s my understanding the village board will affirmatively provide what their thinking and legislative intent was when drafting the PUDD in the form it was now,” LaVigne said.

Her understanding, she said, was that the board wasn’t mandating 203 River St. be included in the project, and that it was “an element that was more discretionary” based on the size of the hotel and the number of parking spaces that would be required.

Regardless, the inclusion of the 0.10-acre River Street parcel was crucial to the Lake Flower PUDD. Under village law, a PUDD has to be at least 3 acres, and the three motel properties only add up to 2.97 acres.

In September 2014, the Planning Board backed the zoning change for the hotel, but it called for removal of 203 River St. from the PUDD. Planning Board members, and some local residents, had raised concerns about the off-site parking worsening pedestrian and traffic safety issues at the intersection of Lake Flower Avenue, River Street and Brandy Brook Avenue.

However, the village board wanted to keep 203 River St. in the new zoning district, and added it back in. What was its intent in doing so then?

“They had concerns that there wasn’t sufficient enough parking near the hotel,” Evans said at the time.

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New application?

Resort opponent Ellen George, a retired former state Adirondack Park Agency attorney, argues that the project is improperly before the Planning Board.

Speaking Tuesday night, George said the new developers didn’t have a “binding contract” to purchase 203 River St. when the village board, on Jan. 25, granted an extension to the Lake Flower PUDD, which would have otherwise expired in March. Therefore, she said, the extension had no legal effect, so the properties have gone back to their original zoning. George also noted that Saranac Lake Resort’s contracts to buy the three motels where the hotel would be built apparently expired in early May.

Now that 203 River St. is no longer part of the project, George argues that the project has been split into two phases, violating a requirement in the Lake Flower PUDD that requires development in one phase. These changes amount to a modification of the PUDD, George says.

“Any proposed modification to an approved PUDD shall be considered as a new application,” she said, citing the 2014 law the village created to govern PUDDs.

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Owners concerned

The new owners of 203 River St. are raising the same concerns through their attorney, John Muldowney of Saranac Lake.

Eric and Kristina Isachsen of Brant Lake recently sold the property to Malone Real Estate LLC. Muldowney said he’s “not at liberty to disclose” who is behind Malone Real Estate LLC, but he said his clients are not connected to either of the two groups who have been behind the Lake Flower resort.

In a letter submitted to the Planning Board Tuesday, Muldowney said the application it’s considering shouldn’t be before the board because it has different boundaries, its acreage is less than what’s required, “and the present application contemplates two separate owners of property within the proposed PUDD.” Muldowney also said Saranac Lake Resort LLC didn’t have the necessary legal control of 203 River St. when the village extended the Lake Flower PUDD earlier this year.

“There’s very significant legal issues, and there seems to be either an attempt to work around them or gloss over them, but the law is pretty clear,” Muldowney told the Enterprise.

“The 2014 law is very clear that modifications (to an approved PUDD) are to be treated as a new application and have to go back to the beginning. It seems to me like the village attorney, from what you’re telling me, is saying something different than that.”

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Avoiding paralysis?

The project is in the thick of Planning Board review right now, but “clearly if the village board comes back with a finding that this project was not properly in front of the Planning Board, then we will stop doing site plan review,” board Chairwoman Leslie Karasin said during Tuesday’s meeting.

Karasin told the Enterprise Wednesday that she read the memo from the village’s special counsel, but she declined to comment on whether it raised any red flags to her.

“I have faith that the village legal staff, the actual staff and the retained staff, are providing us with balanced guidance,” she said. “Our job is to do site plan review. It’s our staff and our village board’s job to think about the legal questions more carefully. Not that they’re unimportant to the Planning Board. They are, but I think there’s a risk of us just getting locked in a sense of paralysis.

“I’m not trying to ram through with the assumption that the current project fits legally. I’m just saying, let’s get going on this and make what progress we can.”