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HAY RIVER - A controversial application to rezone a residential lot in Hay River was narrowly rejected by town council at a tense Sept. 29 meeting.

Councillors voted 5-3 against the application on third reading.

The owners of the Cameron Crescent lot want it rezoned from institutional to multi-family residential.

The request prompted almost unanimous opposition by area residents, about 20 of whom attended the final vote.

"We feel for the developer," said Roman Moizis, a spokesperson for residents, following the meeting.

However, Moizis said the possibility of a multi-family unit on Cameron Crescent did not fit in the single-family neighbourhood.

Moizis said the defeat of the application shows there is still democracy in Hay River.

"We're willing to work with the developer, if he's willing to work with us," he said, suggesting something suitable could be built on the lot.

The property owners, Jeff and Erin Griffiths, also attended the Sept. 29 meeting, but left quickly after the vote.

Contacted later in the week, Jeff Griffiths said he doesn't understand why the application was rejected after passing first and second reading.

"We can reapply in a year," he said, adding a new council will be elected in 2009.

Griffiths said he will not be building single-unit homes on the large lot, as some area residents have suggested.

"They can buy the lot and do it," he said. "I'm not going to do it."

Griffiths also said court action is possible over the rejection of the application.

"All they have done is buy time," he said of the rezoning issue. "It's not going away."

Most area residents feared rezoning the .23-hectare lot would lead to a multiplex and create traffic problems, make the area unsafe for children and lower property values.

Last month, the town rejected a petition calling for a plebiscite on rezoning.

The petition contained 680 signatures, much more than required under the Cities, Towns and Villages Act. However, the town challenged 152 names not on the voters' list.

Ron Karp, the petition organizer, has brought the matter to the NWT Supreme Court for clarification on challenging names.

Mayor Jean-Marc Miltenberger said 152 people were required to make declarations they meet the requirements as eligible voters, but only 10 did so.

While the Sept. 29 vote ended the rezoning application, it raised another issue - councillors voting when they may be in conflict of interest.

Miltenberger is disappointed some councillors, in particular Coun. Sandra Lester, voted when the town's legal counsel suggested they were in possible conflict of interest.

Miltenberger said Lester, who voted against rezoning, was in conflict because she owns rental property in Hay River and new housing in Cameron Crescent could have been competition for her property.

During the meeting, Lester said her own legal counsel told her she is not in conflict.

"I have no monetary gain," she said.

Miltenberger said Lester's counsel is an Edmonton lawyer who has been involved in litigation against the town. Most recently, the lawyer filed a statement of claim for Stan Dean and Sons Ltd. over the town's awarding of tenders in 2006 for the Stewart Drive drainage and rehabilitation project.

The mayor said Lester's vote leaves the town open to legal action by the owners of the Cameron Crescent lot.

Lester disagreed with Miltenberger suggestion she was in conflict, adding she has voted on all sorts of rezoning issues.

"It's just this one," she said.

Lester said the mayor overstepped his role in applying the town's code of ethics, adding councillors make up their own minds on conflict of interest and no other councillor had a problem with her voting.

Miltenberger said he can only advise councillors on conflict of interest.

"They can choose to ignore this," he said. "It's very disheartening when they do."

Miltenberger also advised Coun. Kevin Wallington he was in conflict because he lives on Cameron Crescent.

Wallington said he doesn't benefit financially one way or the other from the rezoning.

"I felt it was important for all councillors to vote on it," said Wallington, who opposed rezoning.

A third council member in possible conflict was Deputy Mayor Mike Maher, chair of the Southwest Territorial Business Development Corp., where Jeff Griffiths is general manager.

At the Sept. 29 meeting, Maher said, if any other councillor felt he was in conflict, he would not vote. No other councillor objected, and he supported rezoning.