A developer's vision for what he termed a "gateway to the New Marigny" was dealt a setback Tuesday, when city planners approved his proposal for a hotel on St. Bernard Avenue but called for limitations on its height and total floor area that the developer said would undercut the project's economics.

The project needs a conditional-use permit, which requires City Council approval, because it involves more than 10,000 square feet.

Calvin Lain is president of Devalepay Inc., which owns the triangular-shaped property at 1201-1219 St. Bernard Ave., in the area sometimes known as New Marigny. The site now includes a car wash, billboard and warehouse, which would be torn down.

Lain has proposed building a 34,000-square-foot hotel with 44 rooms and nearly 1,600 square feet of commercial and retail space.

The proposed five-story structure, with an overall height of 60 feet, would have eight parking spaces within the building, according to Lain's application.

In a report, the City Planning Commission's staff said the hotel and retail uses were consistent with the city's master plan that governs development. Much of the nearby area consists of one- and two-family residences, along with multi-family residences, churches, parks and corner retail stores, the report noted.

But, the planners said, the proposal involves "waivers for height and floor area ratio that would allow the construction of a development that would be far taller and bulkier than any other structure in the vicinity."

The staff recommended limiting the building's height and floor area ratio to bring it "into a more manageable scale that would be more appropriate for the surrounding context and future development potential of the corridor."

The staff recommended restricting the height to 50 feet and reducing the building's mass.

The application included numerous emails from nearby residents praising the development.

At Tuesday's commission meeting, a handful of people spoke for or against the proposal, some noting concern about its scale and potential traffic issues while others expressed optimism about new investment in that neighborhood.

The Historic Faubourg Treme Association urged the commission to either deny or defer approval of the request, citing concerns about the plan, including its size and a video screen proposed for the building's exterior.

"This property has an irregular shape, and it's unique that it sits between two primary neighborhoods. It's not part of Treme. It's not part of Marigny," said Lain, who referred to it instead as "the gateway to the New Marigny."

Lain urged the Planning Commission to approve the application without the size restrictions so that the building could be built as he wishes.

After some discussion, the commission voted 5-1 to endorse the project but with the restrictions recommended by the staff.

After the meeting, Lain said he was unsure if he would proceed with the project under those stipulations, saying that the requested height and floor area ratio "are needed to be a successful project."

He said the restrictions would cut the project — which a month ago he estimated would cost $6 million — by one-third.

The final decision rests with the City Council. The project is in the district of Councilwoman Nadine Ramsey, who has often sided with developers.

Follow Richard Thompson on Twitter, @rthompsonMSY.