The possibility that Hennepin County might buy land in the Bassett Creek Valley of Minneapolis for future overnight commuter railcar storage has upset Harrison neighborhood leaders who want to see the area used for office and residential development.

An overflow crowd of close to 90 residents met Thursday night with city and county representatives to discuss differences on future use of a portion of the valley along Interstate 394, west of downtown.

The city has designated its impound lot area and the adjacent Linden Yards public works area for redevelopment. Developer Ryan Cos. in 2008 was conditionally awarded exclusive development rights for five years to further refine its proposal for offices and housing in the area.

But a draft city staff proposal expected to go to the City Council in February proposes that all or part of the eastern half of the city-owned Linden Yards be sold to the county for storage of commuter and passenger rail cars for a rail service that has yet to be built.

The county doesn't operate rail services, but it has played a role in preparing Minneapolis for such service by securing land for facilities, according to county Commissioner Peter McLaughlin, who chairs the council's rail authority. Speaking before the meeting, he said a county feasibility study looking at several potential sites for storing railcars won't be ready until May. The space would be needed if rail service is extended to such places as St. Cloud or Duluth.

The draft staff proposal also urges that the city delay indefinitely moving its impound lot to make way for redevelopment. The Public Works Department estimates the net cost of moving at more than $14 million, largely because of the cost of buying and clearing a new site. City officials say the impound area should be reconfigured, and rest rooms and waiting space added for the public.

"They're really sort of putting the brakes on development," said Vicki Moore, a Harrison resident who is on the redevelopment's oversight panel.

Several residents suggested that the county put rail storage in the Cedar Yard it already owns at the base of Lowry Hill. County representative Dean Michalko said that's one option being studied but there are logistical problems.

The department also said that it would be difficult to move the city's concrete-crushing plant elsewhere in the city, but that outsourcing crushing would raise street construction costs by about $600,000 annually.

But the prospect of losing some of Ryan's redevelopment alarms Harrison representatives, even though it would take place in next-door Bryn Mawr neighborhood. The possible railcar site would be the second of three phases of Ryan development. The impound lot occupies the third phase.

Ryan's preliminary plans in 2008 would develop $164 million in space in those two phases between 2016 and 2020, including 750,000 square feet of office space and 486 units of housing. The first phase of the proposed development through 2015 was proposed at $162 million.

Steve Brandt • 612-673-4438