A decision on the controversial inn proposal for Diamond Cove has been postponed until October.

The Portland City Council decided, after a long hearing on Sept. 3, to move the decision on the project to its Oct. 6 council meeting.

This comes after a new group, the Friends of Great Diamond Island, filed a lawsuit in Cumberland County Superior Court to block the proposed development.

The group claims, in the lawsuit, that the city failed to properly foreclose on the property and therefore cannot sell it to the developers.

The proposed developers, the Inn at Diamond Cove, LLC plan to convert the former Fort McKinley Double Barracks and Hospital buildings into an inn. During the first phase of development, a potential of 36 units could be rented per night with a total occupancy of 72 people. David Bateman, one of Diamond Cove’s original developers, is part of the group called the Inn at Diamond Cove LLC.

The proposed inn is a cross between a traditional inn and a hotel, called a residential hotel condominium. The inn’s units would be owned by investors, who may or may not live there, and would have kitchens and at least one bathroom. Buffalo-based Hart Hotels, the company that runs the Portland Harbor Hotel, will manage the inn.

In June, the Portland Planning Board approved a zoning change for the site, which now allows hotels but not hotel condominiums, by a vote of 3 to 2. The Portland City Council also has to vote on the zoning change. The developers signed a contract for an option to purchase the two buildings for $1, which are dilapidates, in May of 2007.

Members of the new Friends of Great Diamond Island, said the lawsuit was the only way to proceed, since the city has not listened to their concerns about the project. “I took the lawsuit to get them to listen to issue-to issues that have been raised for the past year,” said Danny Briere, who lives in Connecticut and owns a unit at Diamond Cove.

Diamond Cove is a private, condominium development that was started in the 1980s. But there is another group of summer cottages on the other side of Great Diamond Island, which is represented by the Diamond Island Association. Members of both groups joined together to file the lawsuit.

David Bateman said he had no comment on the lawsuit.

Bill Robitzek, president of Friends of Great Diamond Island, said the new development threatens the way of life on the island, by introducing a larger group of transients who would stay at the hotel. Robitzek has owned property in the cottage community for 20 years.

“We’re talking about a community that evokes memories of Mayberry RFD, where neighbors wander from porch to porch and the streets in summer are full of kids drawing and riding scooters,” said Robitzek in a press release. “This proposed commercial hotel would threaten that. Too much development and then you’ve got too much traffic, too much burden on the fragile island environment resulting in an overtaxed ecosystem and physical infrastructure.”

“This is really a different situation than plopping a hotel into downtown Portland,” said Robitzek .

The lawsuit also states that both the city and the Maine Department of Environmental Protection have issued several orders to restrict development on Diamond Cove, which this project would violate. When Diamond Cove was first proposed in the 1980s several groups opposing the project (including the Island Institute, which publishes Working Waterfront) and the developers signed a covenant defining land use rule on the site.

The suit also claims that the inn is trying to weaken or remove zoning laws to allow for a development that would be banned under current zoning.

The suit also claims that the City of Portland cast 23 votes in favor of this proposed development at a June 30, 2007 special meeting of the Diamond Cove Homeowners Association. Because the city did not actually own these two properties because it did not properly foreclose on them, their votes on June 30 are invalid, according to the suit.

The change passed by two votes, and would have failed except for the votes cast by the city, the lawsuit states. According to the suit, the homeowner’s association needed 67 percent of the votes to approve the project.

But since the suit was filed on Aug. 27, Friends of Great Diamond Island have discovered that the threshold for approving the project is higher.

Robitzek also said at the Sept. 3 hearing that the Diamond Cove Homeowners Association actually needed an 80 percent approval to make a change in land use, according to the association’s bylaws, according to Briere.