Real estate listing indicates City Beach resort hotel will include condos

By Zach Hagadone
Reader Staff

Local social media users kicked up a fuss late last month when a real estate listing on Zillow made the rounds, showing that Averill Hospitality was planning to reduce the number of hotel units at its resort development adjacent to City Beach and replace them with condos.

Rendering showing the proposed resort hotel project from Averill Hospitality, located at the current Best Western Edgewater site. Photo courtesy OZ Architecture.

According to current indications, the number of hotel rooms at 56 Bridge St. could be cut down to 99 and 27 condos offered for prices ranging from about $1.3 million for one-bedroom, one-bathroom units to more than $3.5 million for three-bed, three-bath units. 

Sizes may range from about 1,000 square feet to more than 2,300 square feet, promising access to all the amenities offered by the hotel, as well as discounts on boat rentals, restaurants and spa services; priority reservations at restaurants; maid service; grocery stocking; and a rental program with 60% to the owner and 40% to the resort plus a management fee.

The listings for the pre-sale of the condos at what is being called the Sandpoint Lakeside Resort disappeared from the Selkirk Multiple Listing Service and Zillow not long after it was shared Jan. 25 on social media, leaving some observers scratching their heads.

Sandpoint Planning and Community Development Director Jason Welker told the Reader that City Hall had been made aware of the Whitefish, Mont.-based developer’s interest in condoizing a portion of the resort in November, and was under the impression that “most” of the privately owned condos would be managed as short-term rentals through a “widely used model for financing projects like this referred to as a ‘condotel.’”

As such, the condos would be subject to the city’s lodging tax — which is active until 2035 — and applied to short-term lodging. 

The tax benefits to the city were a central part of Averill Hospitality’s initial proposal in summer 2024 — with the developer suggesting the then-181-room hotel would bring in $500,000-$600,000 per year in property taxes and $2.5 million in “tourist tax” local option revenue.

“The city has not run any sort of model to estimate potential revenues based on occupancy assumptions of the originally planned 181 hotel rooms versus what appears to be the current proposal for 99 hotel rooms and 27 condos of various sizes,” Welker wrote in an email. “But for the periods during which those condo rooms are rented out by the hotel, they will be taxed just like the hotel rooms would have been.”

An Averill Hospitality representative did respond to requests for comment, but declined to go on the record.

Welker, however, told the Reader that the condo plan is an allowed use under City Code and, because the site plan and underlying use for the hotel has not changed, it does not require a public hearing for approval.

There is a process the development must undertake to secure a condo plat before proceeding, but Welker said that hadn’t happened as of press time. Once such an application is received by the city, it would undergo review and be noticed for public feedback, as well as include an appeal period. He estimated that could take — at the soonest — between four and six weeks upon filing, though a monthslong process might be more expected.  

That’s why some were confused to see the condos listed for pre-sale, and the reason the listings disappeared.

“We don’t allow in the MLS, per our MLS rules and regulations, property that has not passed final approval of plat or planning and zoning and things like that,” Selkirk Association of Realtors Executive Stephanie Rief told the Reader. “If you can’t sell it, you can’t put it on the MLS.”

Rief said she also had been told by numerous sources that the resort would feature a limited number of condos, with the majority of the development dedicated to hotel rooms.

“The Averills gave a presentation of what their plans were for the units at City Beach at a chamber luncheon last week. From what I have seen from them and heard from them, they truly do have the community’s best interests at heart,” she added, chalking up the premature pre-sale listings to “some confusion and some miscommunication.”

That didn’t stop social media commenters from expressing frustration that the condos hadn’t been a high-profile part of the project when first introduced, and worries that the addition of private owners at the location would put stress on parking and trend the wider beach area toward more exclusive use by the resort.

Sandpoint Mayor Jeremy Grimm has repeatedly pushed back against the idea that City Beach may be “privatized” as a result of the resort development, stating at the Jan. 21 meeting of the Sandpoint Planning and Zoning Commission, “City Beach is not being sold, it’s not being privatized, it never will be under my administration.” 

The resort project has also rankled some community members with a reduction in dedicated off-street parking, opting to pay the city’s “in lieu” fee to shrink its number of required spaces from 244 to 145. Several residents testified at the Jan. 21 P&Z meeting that they feared fewer parking stalls at the resort would result in “spill over” to the beach parking area, thus cutting down access for beach users.

Welker said that’s not a big concern, considering overnight parking at the beach is prohibited. 

“The hotel’s parking needs are intended to be met by the hotel through their code-required off-street parking facilities,” he said. “The hotel’s representative suggested over the phone today that for peak season special events such as weddings, the hotel intends to provide off-site parking for guests and using their provided shuttle services — similar to what the Festival at Sandpoint does to reduce the negative impacts of Festival parking around Memorial Field during their annual concert series.”

Welker also told the Reader that the parking reduction “was not based on any proposal to pre-sell condo units within the hotel.”

Regardless, he reassessed the calculations used to determine how many off-street parking spaces would have been required under an initial conditional use permit envisioning 27 condos and 99 hotel rooms, and “the net effect would have been 44 fewer off-street stalls required (putting it at around 196 off-street stalls instead of the 240),” he said. 

“I have informed the hotel’s representatives that the 145 spaces currently planned for the development will not be further reduced by city staff,” Welker added.

A question to the broker who was identified on the condo listing went unanswered by press time, making it unclear if and when Averill Hospitality would file for the condo plat and, again, list the units for pre-sale.