The Cambridge City Council passes the necessary zoning ordinance and approves the Master Plan, but only after Forest City agrees to build 150 units of mixed-income housing. The city's Rent Control Board grants permission to raze the housing units. Courts later revoke this permit and demand a fact-finding hearing because the Board failed to consider all impacts on residents. 1989 MIT finally gets permission to demolish or relocate the residences. And Forest City begins to look for firms to manage and finance the hotel.
Talks get under way with a Japanese bank.
In a classic Catch-22 situation, Cambridge refuses to issue eviction certificates until financing is secured. And Sheraton, slated to run the hotel, is reluctant to commit any money without it. The Japanese bank pulls out of the deal. With the U.S. economy in a tailspin, hotel occupancy rates in New England plummet. Development of the hotel is put on hold for three years.