A potential zoning issue has cropped up that could potentially delay plans for a $2 million luxury apartment/retail complex being proposed for North Hudson Avenue where the old American Linen plant once stood.

Developer Camelot Associates presented revised plans at the Village Board of Trustees meeting in May to add more than 6,000 square feet of retail space to its 40-apartment proposal. That change came after a public hearing in April in which residents voiced a greater need for commercial/retail business in the village versus strictly housing at the lot at 950 Hudson Ave.

To fit the retail space, however, the project was redesigned from two-story to three-story buildings, with 12 one- and two-bedroom apartments per building.

Following a brief presentation on some minor changes to the project at the board’s June 16 meeting, the developers were told that further research has revealed that village zoning may not allow three-story buildings on the site and that the limit of dwelling units per building may be 10 not 12.

The developers had been seeking a special use permit from the village and approval of its application for local land development to move forward. But under these new circumstances the project may now require a variance from the Zoning Board of Appeals, which could delay the project further.

This angered Camelot President Dennis DeGennaro, who said he changed his plans and added commercial space to appease residents and now he was “being led in the wrong direction.”

“We’ve been working on this for a lot of years and we are spending a great deal of money doing this,” DeGennaro said. “This board thought we needed retail so we switched our trail. So I’m a little upset that now we’re in the 12th hour here and we’re being asked to change our plans again.”

“These are the zoning laws I’ve been reading, and this is a part time, part time, part time, job,” answered Trustee John Murphy, who rejoined the board with an appointment in April. “I am doing the best I can to digest the literature before me, being fair to you guys and to the citizens who elect us. This is a balance.”

Mayor Rick Nelson agreed, saying he’d like to see the board move forward with the modified (retail/apartment) plans but they need to go through due process.

“In my mind we are not going backwards,” Mayor Nelson said. “But these plans were just delivered to us yesterday and many of us are only seeing them for the first time tonight. We have a new board here, a new mayor, and two new Trustees. We need time to digest this and come up with our thoughts then come back and see where the middle ground is.”

Concerned about further delays, Trustee Judith Wood-Shaw asked if the building plans could be reverted back to their original two-story configuration, still offer retail space and avoid the need for a variance.

“Stillwater needs something now to revitalize it,” Wood-Shaw said. “I’ve been a lifelong residents here and I envision Stillwater being bigger and better than when I was 10 and it’s not, it’s worse. There is no business here any more. And I think as we draw in more people we’ll draw in more business and it will just take off from there. I like this (proposal) and I’d like it to move forward.”

Mayor Nelson directed Wood-Shaw and Trustee/Deputy Mayor Frank Tatum to continue meeting with the developers over the planning and zoning issues and report back to the board in coming weeks.