CALGARY -- Canmore council rejected a proposal Tuesday for an extensive housing development on the eastern edge of the mountain town.

Smith Creek would have added about 3,500 residents to the town and required an expansion of municipal development boundaries.

The proposal's sibling, Three Sisters Village, is still in play with councillors adding several amendments before voting to send it to a third and final reading in two weeks time.

The amendments seek guarantees for building of promised commercial space as well as requiring 20 per cent of homes to be "affordable."

"It's been at this crossroads for some time, housing is becoming less and less affordable, less and less attainable to people who are living and working in Canmore," said Mayor John Borrowman, adding council faces a difficult decision that will impact the town's future no matter what is decided.

The proposals are contentious for a number of reasons. Many are concerned about expensive vacation homes sitting vacant for much of the year and a spike in potential population is another.

The development would also further tighten a wildlife corridor on the south side of the Bow Valley.

Much of the area was mined for coal decades ago, using a method that anticipated future collapse or slumping of the surface. The developer says they have accounted for the issue in their planning process.

Council will revisit the proposal in two weeks.

The developer, Three Sisters Mountain Village, says it needs time to understand what all the amendments would mean.