In a surprise move that could cripple the renaissance of downtown Stroudsburg, borough council Tuesday night rejected a plan to build a five-story, 50-unit apartment building that would have filled empty lots hidden for years behind artists’ murals in the 600 block of Main Street.


Council’s decision, on a motion by council member Matt Abell, came a week after the borough’s Historic Architectural Review Board recommended council approve Shanti House, a project pushed for years by New York City developers. It would have dramatically altered the downtown skyline and filled the gaping hole left after demolition crews leveled the remains of the buildings destroyed 14 years ago in a fire of suspicious origin that ripped through the prime real estate on Main Street near Seventh Street.


The project, which appeared to be on the cusp of coming together after years of back-and-forth between borough officials and the developers, was a glimmer of good economic news that surfaced ironically while businesses large and small wonder if they will survive the economic downturn wrought by the pandemic and what some businesses believe are draconian steps that have been taken to contain it.


Abell, who initially wanted to delay a vote on the project but then switched to a motion to deny, said there are elements of the design that violate borough ordinances, including one banning the use of what are called PTAC units, or packaged terminal air conditioners that are frequently used in hotels and apartment buildings. He also criticized the borough for not giving council enough time to review the information on the Shanti project.


Mayor Tarah Probst said Wednesday she was disappointed with council given the years of work that’s been put into the project and made a plea to the developers to "not give up on Stroudsburg."


She said the developers, who have done "everything and more we’ve asked them," could appeal council’s decision.


"I respect council but I think they got this one wrong," Probst said.


While the future of Shanti House is unclear, a plan was approved to bring a new restaurant, a bold idea given the the current struggles of restaurants and bars, to that block a few doors down the street from the Shanti site.


Owner Finola Conboy, whose husband Des Conboy was one of the former owners of Siamsa Irish Pub until it was sold in 2017, said her new business will be an upscale restaurant/bar, not a local dive serving cheap drinks and loud music, though it will serve takeout beer and wine.


She said she prefers acoustic guitars and ensembles over DJs and jukeboxes and told council the restaurant, tentatively called Finola’s, would "brighten up" that side of the block, which is now populated with empty lots and storefronts, including the spot at 615 Main St., where the restaurant is planned.


Finola Conboy, who grew up in Ireland in a family in the restaurant business, said extensive renovations are planned for the interior of the building and predicted it will open in 9 to 12 months, based on developments in the fight against the pandemic. She said the restaurant will feature American cuisine with 75-80 seats and meals from $18 to $34.


That side of the block has been hammered for years by failed businesses and fires, including an arson in 2018 at 14kt Outlet’s Fine Jewelry Design, 611 Main St., set by business owner Mona Siwiec of Saylorsburg. Siwiec’s charges were thrown out of court after a judge ruled she was legally insane.


Finola Conboy’s future restaurant is across the street from Newberry’s Yard of Ale, and owner Barry Lynch said another restaurant is good for business because it will draw more potential customers to the downtown.


Lynch’s old customers in the 700 block of Main Street, where he ran Jock N’ Jill’s Sports Bar and Grill, The Hideaway Lounge and Sarah’s Corner Café, have been closed for years and show no signs of anyone bellying up to the bar any time soon.


The upstairs portion of the corner property, the site of the landmark Penn Stroud Hotel, had been closed for years while undergoing extensive repairs and renovations overseen by a new owner, Keyur Patel, and opened just as the pandemic hit.