PORTLAND — Some city councilors are displeased that the new owners of the Eastland Park Hotel won’t have to pay for or replace the building’s 50 residential apartments, which are planned for conversion to hotel rooms.

A Feb. 23 ruling by Planning and Urban Development Director Penny St. Louis exempts RockBridge Capital from the city’s Replacement Housing Ordinance. In a letter to the Ohio investment company, St. Louis said the ordinance does not apply to RockBridge, which acquired the High Street hotel this week.

The Housing Replacement Ordinance is supposed to help keep the city’s rental housing stock from shrinking. The ordinance requires property owners to either replace units they remove or pay a fee. But it was amended last year and the new language broadens exemptions to the requirement.

The amended ordinance, written by the city’s corporation counsel, exempts proposed plans for “consolidation or elimination of dwelling units within an existing structure.”

“Needless to say, the intent of the amendment was not that all existing units be exempt,” Councilor John Anton said this week. He said the intent of the amendment was to ensure no net loss of square footage of rental housing.

Anton this week took aim at city staff for not writing the ordinance amendment correctly and then for interpreting it in a way Anton alleges staff should have known was not the intent.

“The council, as it always does and as it must, relied on city staff to put that intent into legal language,” said Anton. “Now, only a year later, the same city staff is arguing that the language they drafted actually states that all housing units in the city are exempt from the Housing Replacement Ordinance.”

St. Louis said this week that her job is to interpret the ordinance as written because the plain language is what would be looked at if the ruling were to go before a judge in an appeal.

City Councilor Kevin Donoghue, a member of the Housing Committee, said he only heard about the ruling by St. Louis this week. He said the Housing Committee briefly discussed the amended ordinance at a meeting in January, but he was not aware then that RockBridge had applied for a waiver. He said the committee was asked at that time if they wanted to amend the ordinance to exempt the Eastland project.

The request by RockBridge was made Dec. 15, 2010.

Donoghue said that while the ruling is a done deal, there is an accountability issue for city personnel that needs to be handled. He said while he is not blaming anyone in particular, some staffers have long opposed the Housing Replacement Ordinance.

“The language is not consistent with the intent of the council,” Donoghue said. “There isn’t even a loophole. It is a complete negation of the intent.”

Donoghue said besides the $2.5 million the city would have collected in fees from RockBridge, the exemption also has a social cost.

“There is going to be a real cost to my constituents when they are made to move out,” he said. “It’s a real mess.”

About 30 of the Eastland units are occupied, St. Louis said. She said she thinks the city will work cooperatively with the new owners to find housing for displaced tenants.

“I don’t think (evictions) are going to happen right away,” she said. “There will be a period of transition.”

Donoghue and Anton both said they did not notice the exemption clause when the council passed the amended version of the ordinance last year.

Mayor Nick Mavodones this week said he did not remember voting on the amendments, but wished a councilor had noticed it at some point in advance.

He also defended the staff ruling.

“I don’t have any reason to question the decision,” the mayor said, adding that he spoke with former City Manager Joe Gray earlier this year about the exemption for the Eastland and that their discussion included that the new owner planned on helping tenants find new homes.

Donoghue said the council should consider an emergency order to correct the ordinance. He did not know when that might happen.

“It won’t keep people in their homes,” he said.

James  Katsiaficas, the local attorney for RockBridge, referred questions about the company’s plans to officials in Columbus, Ohio, who did not immediately respond.

Kate Bucklin can be reached at 781-3661 ext. 106 or kbucklin@theforecaster.net

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