LINCOLN CITY - Business and government officials have agreed to review a decision by the Planning Commission that grants an extension to the stalled Villages at Cascade Head project at the north end of town.

The project, originally approved in 1996 as a neighborhood for up to 2,000 homes, has undergone several changes in ownership and currently consists of just 12 completed residences.

On Jan. 3, the day the project's planning permits were due to expire, the Lincoln City Planning Commission granted Villages owner Teeny Development, LLC, a two-year extension.

Then, during the Lincoln City Council's meeting Jan. 9, City Manager David Hawker urged councilors to review the decision, saying he was troubled by the developer's failure to meet conditions attached to a previous extension issued in 2010.

Hawker said Teeny had submitted its application materials on the same day the issue was due to appear before the planning commissioners, making it impossible for staff to fully evaluate the request. "This all went so fast," he said.

"I guess, up until the end, we thought they were going to let this lapse."

If the planning permissions expire, anyone hoping to develop the 479-acre site would have to start from scratch.

In addition, the development would not be governed by the Villages master plan, which imposes unusually strict environmental conditions. Teeny hit the headlines in 2008 when the project's first completed unit was awarded Platinum certification through the Leadership in Energy and Environmental Design (LEED) program, becoming only the second home in the state to achieve the highest rating.

In a letter to planners, Teeny director Jeff Teeny said a two-year extension would allow the company to complete and sell the first 78 homes, generating enough cash flow to fund further development.

He said the extra time also would allow his company to redesign the project to meet modern needs.

The Planning Commission granted the two-year extension - with a requirement that Teeny provide updates every six months on its progress toward meeting the various conditions planners had imposed on the 2010 extension, many of which remain unfulfilled.

Planning director Richard Townsend said Teeny had failed to pay its share of local water and sewer system upgrades, failed to complete required road paving and failed to repair the storm water system on Devils Lake Boulevard.

Hawker said, "If the applicant is serious about this extension, I would like to see them come in with a little more than they brought in."

The city councilors agreed to call up the commission's decision for review during the council's March 12 meeting.