Department of Community Affairs officials, who regulate development in the Keys, say the plan to build a resort on the site of the Jabour Campground and Trailer Court violates the city's comprehensive plan, because it allows 79 more units than is allowed on a 1.5 acre piece of property in that section of the city. Under the zoning regulations, only 33 units would be allowed, DCA attorney Timothy Dennis said. The plan will have to be modified in order for the state to approve it, according to the department.

Currently 80 units exist on the property at 223 Elizabeth St. Caroline Street Partners LLC is proposing to build a hotel, 100-plus seat restaurant, 89 parking spaces, commercial retail space, bicycle racks, 5,000 square feet for hotel laundry, office space, an exercise room and meeting rooms on the site. For years, the city and the Jabour family have battled over the number of units that can be there, Caroline Street Partners attorney Jim Hendrick said.

Earlier this year, Caroline Street Partners entered into a contract to purchase the property from the Jabours. On Aug. 28, the Key West City Commission agreed to a settlement on the number of units.

The Department of Community Affairs filed the appeal late last week. The appeal is the latest in a series of legal challenges to the plan. Two groups of neighbors have filed separate lawsuits challenging the plan on two grounds: that the plan includes too many units, and that the city violated their due process by not allowing them to question developers during the commission meeting.

"We clearly had the right to cross-examine the other side and present our case," attorney Lee Rohe said. "They don't have the right to place that many units there. The density is way out of whack."

Hendrick said the state agency's appeal contains factual errors regarding the number of units that can be there. The city recognizes 86 sewer hookups for units on the Jabour's property. State permits call for 101 sewer hookups there, Hendrick said.

The plan must be approved by the Department of Community Affairs before building permits can be issued, Dennis said. The issue will go before a state administrative judge. It could take several months before a resolution can be worked out.

The Keys are in a fragile ecosystem and classified as an Area of Critical State Concern. Only a limited number of building permits can be issued a year and development is closely monitored. There have been several high-profile battles between the government and developers over development rights.

The proposal comes as Keys cities and the county grapple with the issue of converting RV and mobile home parks into resorts or moving development rights to other sections of property.

"[Developers] are buying up all the RV and mobile home parks. They are taking away our last vestige of affordable housing," Rohe said.