Southold weighs ending hotel moratorium as zoning updates advance

A hotel proposal at the former Capital One Bank headquarters in Mattituck could gain new momentum when Southold’s moratorium expires June 18, just as town officials prepare to tighten short-term rental rules and rewrite parts of the zoning code.

Planning Director Heather Lanza told the Town Board that the new rental regulations could reduce transient-rental inventory by roughly 60% to 70%, a shift she said could leave room for hotels to serve visitors and local businesses. That argument now sits at the center of Southold’s next land-use decision: whether to keep hotel applications on hold or let the next wave of lodging projects move forward while the broader code is still being pieced together.

Southold first adopted a 12-month hotel, motel and resort moratorium on June 18, 2024, after deciding it needed time to review how hotels fit within the town’s 19 zoning districts. The Suffolk County Planning Commission recommended a six-month pause, but Southold chose a year. The town later extended the moratorium on May 28, 2025, pushing the sunset to June 18, 2026. The original freeze took effect when it was filed with the New York Secretary of State.

The moratorium was tied to a zoning review led with help from ZoneCo LLC and Hardesty & Hanover, with hotel density and permitted locations among the issues under study. Southold released a proposed new zoning code and zoning map for public review on April 23, 2025, calling it the town’s first comprehensive zoning update since 1989. After public review, officials shifted away from one sweeping rewrite and began splitting the work into smaller phases. A town progress report dated April 21, 2026 said that approach was more practical for a small municipality with limited staff and resources.

Those phased updates reach far beyond hotels. The Town Board has already agreed to prioritize community housing, the big house law, a tree-clearing code, design standards for non-residential development, support for agriculture and marina businesses, water-conservation measures, coastal-resilience rules and clearer code definitions. Residents have pushed for stronger tree rules, especially around residential clearing, while the town has already adjusted its big house law, first approved in 2022 and tweaked again unanimously in January 2026.

The hotel debate is unfolding alongside Southold’s effort to rein in short-term rentals. The town has banned rentals of fewer than 14 days since 2015, though officials have said the rule is difficult to enforce. A 2024 task force recommended changing the definition to fewer than 30 days and allowing permits through a lottery. Southold has also begun using Rentalscape by Deckard Technologies to track booking length and pricing on rental websites for code enforcement.

Town officials have estimated short-term rentals generate about $25 million a year for property owners, and the proposed cap under discussion is 1% of the housing stock. Staff have said the new short-term rental code may not be ready until January 2027, and the town has warned that properties without a valid rental permit will not be eligible for the lottery.

That leaves Southold weighing more than one moratorium date. It is deciding whether its next phase of growth will be shaped by piecemeal amendments or by a clearer plan for housing, lodging, environmental protection and the pressure now building in places like Mattituck.