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A project to redevelop Dixie's On Grand into a five-story, mixed-use building with 80 market-rate apartments is one step closer to approval after the St. Paul Planning Commission gave it green lights Friday.

The commission voted 9-1 to approve building variances and a conditional use permit for the project. The City Council will discuss rezoning the site at 695 Grand Av. from a B2 Community Business District to T3 Traditional Neighborhood District over the coming weeks.

As proposed, the $32.5 million project would include four ground-floor commercial spaces: two for existing restaurants Emmett's and Saji-Ya, and two for new businesses. Dixie's owner Peter Kenefick plans to retire after 30 years in the restaurant business.

The plan also calls for 80 secure bicycle parking spaces and 99 vehicle parking stalls.

The Planning Commission debated the size, scale and neighborhood aesthetic of the building Friday morning.

The controversial proposal was previously approved by the Zoning Committee and the neighborhood group Summit Hill Association. The commission approved three zoning recommendations, which include a conditional-use permit for a building height of nearly 60 feet, a front-yard setback variance and a building size and height variance.

Opponents of the plan fear that the proposed building would overwhelm their neighborhood charm, while supporters hope it will enliven the neighborhood.

Planning staff found that the variances should not alter the essential character of the neighborhood and cited building materials as an example, which are in line with neighborhood design standards.

Commissioner Nate Hood said he at first was skeptical whether the developer, Reuter Walton, could pull off such a project in the neighborhood, but he was impressed by its engagement with the community.

"They have gained support from the Summit Hill Association, which from my experience is not always an easy thing to do," Hood said. "So if you can do that, frankly you're doing something right."

Hood commended planning staff for their hard work, which made him confident in his vote to move the project forward.

Commissioner Jacob Reilly cast the sole vote against the proposal, citing the practical difficulty associated with the large size of the site.

"It sort of feels like we're squishing something in that doesn't fit, and changing rules so that it can," Reilly said.

The developer said creating a multiuse building in a smaller structure with fewer stories would be challenging, said City Planner Emma Siegworth. This could eliminate retail, underground parking and some of the larger apartments that neighbors want so people can remain in the area when they downsize from their homes.

But there is no requirement to make the building mixed-use, Reilly said, adding that zoning code says multiuse can be within buildings or sites and blocks.

Planning staff found that the variance is in harmony with the general purpose and intent of the zoning code and that the use will be in compliance with the St. Paul Comprehensive Plan, according to the staff report.

The first City Council reading of the rezoning case is scheduled for July 28.

Zoë Jackson • 612-673-7112

Twitter: @zoemjack