New London — Cambridge, Mass.-based Oaktree Development has secured local land-use approval for the latest in a string of multi-unit residential developments being built or under design in the city.

The Planning and Zoning Commission on Thursday unanimously approved a site plan for two multistory buildings with 173 apartment units between Bank Street and Shaw’s Cove. The buildings are considered Phase 2 and 3 of Shaw’s Landing at 400 Bank St., a development completed in 2006 that now contains 35 condominiums.

City officials expect that, if built, the homes will add much sought-after foot traffic and disposable income into the downtown and provide a boost to local businesses.

Mayor Michael Passero said Oaktree was among the first developers he had reached out to five years ago to help realize his economic development goals while in office.

“It’s a big moment tonight I think for the city,” Passero said. “These developers have put in five years' worth of tremendous effort and showed a devotion to the city and the vision we have for this city.”

Parking was the most controversial element of Oaktree’s application and discussion had continued through three different commission meetings. The commission on Thursday approved a waiver of 60 spaces because the development fell short of the required 167 parking spaces. In the initial plans submitted to the city, Oaktree listed 116 spaces on surface lots and in two under-building garages.

Oaktree was negotiating with the city to lease spaces in the municipal parking lot but instead sought the waiver. Zoning regulations allow for developments in the Central Business District to meet parking requirements by using available spaces in the city’s municipal parking lots.

Commission Chairman Barry Levine said the commission has regularly waived parking requirements in downtown because the lack of available parking spaces would otherwise stymie development. He credited the developer with taking on the cost associated with a small and challenging parcel to develop.

“I have looked at this empty, barren space for years,” Levine said. “Infill development is challenging. I am in favor of this and I am hoping and I am expecting the density it brings ... is going to result in people. You need people to have economic activity. I’m tired of hearing our downtown is so down in the mouth.”

The city sold the parcel at 330-400 Bank St. to Oaktree in the late 1990s as part of the Shaw’s Cove Urban Renewal Project. With the existing development agreement expired, the city is hashing out terms of a new agreement that would need City Council approval.

Downtown property owner John Johnson was among others to voice concern about the density of the development, the increase in traffic and existing downtown parking issues. He suggested the developer redesign the project to include more parking.

“This is too dense a project,” Johnson said. “I don’t understand why anybody on the commission doesn’t seem to think so. Think about this — 50 units per acre. It’s insane. That’s New York City density. And we are not New York City.”

Planning and Zoning Commission alternate member Luis Cotto Perez, who did not have a vote, said it didn’t make sense to offer a waiver when Oaktree could simply incorporate more parking into its design.

Oaktree President Arthur Klipfel had explained that the national trend for these types of developments was fewer cars and a need for fewer parking spaces. With the apartments being marketed to younger professionals, such as Electric Boat employees, Kilpfel said he expected many of the residents would be walking or biking. He also said the lack of a waiver would undermine Oaktree’s effort to create a green space, along with amenities such as a pool, in the courtyard of the development — to the benefit of new and existing residents of Shaw's Landing.

New residents also would have the ability to privately obtain permits in the municipal lot from the city if needed, Klipfel said.

Felix Reyes, director of the city’s Office of Development and Planning, called the impact of this development “tremendous,” especially when combined with other projects in the pipeline that include a 98-unit complex and Bank and Howard streets and another 203-unit building planned for Howard Street.

g.smith@theday.com