SOUTH PORTLAND — City councilors on Monday unanimously approved a 95-day construction moratorium for Willard Square, after recognizing that the process had caused a pair of developers to move their business proposal to Knightville.

Meanwhile, those developers are seeking reimbursement from the city for money they spent developing a site plan for the market they proposed in Willard Square.

The moratorium is designed to give the Planning Board and city staff time to address design standards and parking and traffic issues in the mixed-use Willard Square zone.

The developers, Ian Hayward and Glenn Perry – who proposed a European-style eatery called Ebo’s Market at 7 Pillsbury St. – made their position clear: The moratorium killed any opportunity for them to open their business in Willard Square.

The key, Perry said in an interview after the meeting, was timing. After meeting with Planning Department staff, the developers submitted their site plan on May 2, the same day the moratorium proposal first appeared on the City Council’s agenda.

The council gave initial approval to the moratorium at its May 16 meeting, retroactive to May 2.

Perry said Planning Department staff had told him in late April that the site plan he had developed with Hayward met all the current zoning regulations in Willard Square. He said the moratorium was enacted so the city could change the rules midstream.

Perry said the ongoing uncertainty of the moratorium process and when the project would be allowed to go ahead created an unacceptable situation for the developers and their lender.

“There should be no doubt that we withdrew our application because of the moratorium,” Perry told councilors. “Moratoriums are like lawsuits. No bank or investor in their right mind could tolerate the uncertainty of this moratorium.”

“I can’t sit around bleeding equity for months and months while the city takes its time trying to fix this,” Perry said.

Opponents of the market said their opposition had to do with the developers. They said they sought a moratorium because the duo’s proposal raised long-overdue questions about pedestrian safety, traffic congestion and parking.

But Hayward told the council he and his partner were “berated, screamed at and dehumanized” when they visited with the Willard Neighborhood Association earlier this year. He said opponents had simply “buckled on” to a perceived legal issue to stop him and his partner.

“It’s disingenuous that the opposition has taken this turn about safety and design standards,” Hayward said. “Our site plan handled those issues.”

The developers have asked how the city would address the thousands of dollars they spent in developing their site plan. Mayor Rosemarie De Angelis asked for a price tag, but City Manager James Gailey said he was unaware of the city ever reimbursing developers for money spent on failed proposals.

Perry said he and Hayward are still lobbying their creditors to reduce their bills, so they don’t know how much they’ll ask from the city, but the final tally will likely fall between $20,000 and $40,000.

Perry said he cashed in his savings and retirement plan to help fund the proposal. At the council meeting, Hayward said he was broke. Perry said neither of them has earned an income since December.

“All the councilors told me they were sorry, that they felt responsible,” Perry said. “If you apologize, and say it’s your fault, you should probably pay the tab.”

South Portland Community Planner Steve Puleo said the developers had taken only “preliminary steps” for building their market.

Though the two met with Planning Department staff, “they were by no means qualified to go before the Planning Board before a site plan review had taken place,” Puleo said in an interview. “In that sense, there was no legitimately completed application. It never went through the process of review.”

Puleo said that because the site plan had yet to be deemed complete by Planning Department staff, the council was within its rights to become involved.

“There can be a time, if it’s deemed necessary for the public interest, for the council to stop the process,” Puleo said.

De Angelis apologized to Hayward and Perry for the hostile treatment they received from some residents. She said that while she thought change was a good thing, “I’m not particularly enthusiastic about changing the rules midstream. That clearly happened in this process and I think that’s unfortunate.”

Councilor Maxine Beecher, who sponsored the moratorium, said the move is not just about Ebo’s Market, and that other projects are also in the works.

“Safety is a huge issue for those folks who live in Willard Square,” Beecher said. “I can appreciate the money loss for these gentlemen, but at the same time, I’ve talked to other business people and they say when neighbors don’t welcome you with open arms you’re done anyway.'”

Several councilors said they supported the moratorium only to avoid another controversy like the one that engulfed the Ebo’s Market proposal.

Perry and Hayward are in talks with Leddy Houser Associates to open a market in the Mill Cove Landing at 72 Ocean St. Perry said the market will take up 2,600 square feet and include an open, first-floor kitchen. He said he hopes to have it open by Labor Day.

“It’s a marriage made in heaven,” Perry said. “They need an anchor business and we need a place to go.”

Mario Moretto can be reached at 781-3661, ext. 106 or mmoretto@theforecaster.net. Follow Mario on Twitter: @riocarmine.

This story was updated on Thursday, June 9, 2011.