LEBANON — A plan to convert a Route 120 hotel to short-term rental units for workers new to the area was approved by city officials who debated earlier this week whether the property could still be considered a “hotel.”
The Lebanon Zoning Board voted, 4-1, on Monday to allow the 120-room Element Hotel near Centerra Marketplace to reopen without a variance required for multifamily housing.
That’s because “micro-housing” — or providing short-term stays while people seek more permanent homes — is “fundamentally identical in nature” to running a hotel, the Zoning Board ruled.
“I feel like this applicant requires zero variance relief whatsoever,” board member Jeremy Katz said during Monday’s meeting. “It’s a hotel, just a different type of hotel.”
However, the approval does limit stays to 184 days, down from the owners’ initial ask of 270, so that the state could continue collecting meals and rooms tax.
The 9% levy on all accommodations applies only to stays “less than 185 consecutive days.” When a guest hits that 185-day mark, a hotel operator must refund those taxes, according to state Department of Revenue Administration regulations.
The Element opened in 2014 at a cost of about $20 million in the first phase of the proposed Altaria Business Park, a mixed-use development that’s expected to one day include 300,000 square feet of research and office space, 42,000 square feet of retail space and up to 160 condominiums.
However, the building closed after a Christmas Eve explosion and fire in 2019 crippled its mechanical system. The COVID-19 pandemic that followed then “devastated” the hotel industry, according to David Leatherwood, a principal in Norwich Partners, which owns the Element.
He told the Zoning Board that although insurance would largely cover the cost of repairs, the hotel’s lenders determined that reopening the hotel isn’t an “economically viable option.”
If the owners didn’t convert the building to another use, lenders could hold the insurance money “and leave us stuck,” Leatherwood said.
“If I thought there was any conceivable way that (opening the hotel) would work, I wouldn’t be here,” he said. “The financial hit that I take converting this into apartments is dramatic, much more than if I hold it long-term as a hotel.”
Leatherwood hopes to repurpose the Element to provide housing for people who relocate to the Upper Valley but need time to find a permanent home. He told city officials that Dartmouth-Hitchcock Medical Center would be his largest client, although those newly employed at other Upper Valley businesses would also be welcome.
Unlike the former hotel, the reopened building wouldn’t have daily housekeeping services or 24-hour front desk staff. But because all but seven of the rooms already have cooktops, the layout would change little, Leatherwood said.
He told the Valley News last week that rent would likely go for between $1,500 to $1,900 per month, compared with the $130 to $180 per night that was charged as a hotel room.
While Zoning Board members agreed that the Element’s closure was unfortunate, some questioned whether it would be wise to approve more housing within the Route 120 corridor, which is expected to grow in the coming years as other large multifamily developments are completed.
On nearby Mount Support Road, developers have pitched plans to build 761 units in three apartment complexes, while DHMC is reviewing proposals to build a 350- to 400-unit apartment complex on a 40-acre site it owns on Route 120.
“Do we want to approve a multifamily dwelling with 120 new units, putting it 119 over what’s allowed in this district?” asked Board Chairman William Koppenheffer. “And what implications does that have for everybody else?”
That led to a board debate over whether the reopened building would constitute “multifamily” housing.
Some argued that hotels within the area already offer stays up to a year, while others said it’s the amenities that a building offers that should determine whether it can be defined as a hotel.
“If you can’t go onto Hotels.com and book it for a night or two it’s no longer a hotel,” board member Jennifer Mercer said, noting that the building would require written rental agreements.
Koppenheffer and Mercer later set aside their objections and voted to allow the Element’s reopening once the compromise limiting guests’ stay was agreed upon.
Tim Camerato can be reached at tcamerato@vnews.com or 603-727-3223.