KETCHUM — The Ketchum City Council was asked on Monday to give the arts a break. It did, but only in exchange for a break for the city, too.

The Sun Valley Center for the Arts had requested an amendment to the development agreement that will let it construct a new building on the Simplot lot in downtown Ketchum.

Arts officials asked for an extension on the timeline for them to get a building permit. The permit would have been required to be pulled by Jan. 17, 2011, which the proponents described as “unlikely” in the current economic climate. The city eventually agreed to extend the permit, noting that the holders of almost all existing building permits are asking for extensions because of the recession.

However, as an incentive to encourage the SVCA to build sooner rather than later, the council created a tiered system of waivers for community housing.

If the building permit is applied for and granted by Jan. 31, 2011, the city will waive the entire requirement for community housing for the project; if it is granted by Jan. 31, 2012, the city will waive half. After Jan. 31, 2013, though, the SVCA will be required to fulfill its entire community housing requirement of approximately $800,000.

The city also said that the SVCA may use existing housing stock within the city of Ketchum to fulfill that requirement, rather than requiring it to build new housing or pay an in-lieu fee. This is attractive to the SVCA because it might be able to get a donation of an existing home.

“The incentive (for the city) is to turn a shovel sooner rather than later,” said Ketchum Mayor Randy Hall. He said he liked the idea of allowing existing units to satisfy the requirement because that will help dry up the excess condo inventory in the city, tightening the housing market.

This tiered system may provide incentive for donors as well.

The SVCA said it can begin the building design and construction process after it has raised 75 percent of the $17 million cost for the building. Approximately one third has been raised already. If the SVCA can’t raise another 40 percent before Jan. 31, 2011, it will have to raise even more to cover the community housing requirements. This en-courages donors to give now, rather than later.

The council said it was not setting a precedent for many other developers to ask for the same waivers because it specified that this deal was only for non-profit organizations building under a planned unit development agreement. And there aren’t many of those, said city staff.

There is other construction slated for the remainder of Simplot lot that isn’t affected by the agreement.