After 30 years of peddling Southern comfort food in the heart of St. Paul, Dixie's On Grand owner Peter Kenefick is ready to retire the restaurant and put a five-story building in its place.

Kenefick, 64, said if the $32.5 million mixed-use project is approved, it will serve as his legacy. Judging by the reactions of his Summit Hill neighbors, Kenefick's legacy either will spark a resurgence of excitement and commerce along Grand or eclipse the charm of its historic neighborhood.

"I want this to be beautiful," he said of the project he hopes will replace the "tired" one-floor building and parking lot at the corner of 695 Grand Av. "I want this to get people saying, 'What's going on at 695?' "

M.L. Kucera, who lives directly across St. Albans from the Dixie's parking lot, fears a massive new building will make it hard to see anything going on to the west of her third-floor condo, including sunsets.

"I am in favor of some development there," she said, adding that three floors would be more appropriate. "But I would like to see something more in keeping with the height of this neighborhood and with the look of it."

But while neighbors such as Kucera stress over a level of housing density that is heretofore unseen in this area of stately mansions and brownstone walk-ups, others welcome the needed boost it could bring to Grand Avenue. Over the past few years, many have noticed a steady thinning of traffic along what was once one of St. Paul's premier commercial corridors.

"We live in a city. It's a city. We should expect city density," said Dan Marshall, who opened his Mischief toy store on Grand five years ago. "We need housing everywhere in St. Paul. … We need to say yes to housing on Grand Avenue."

Kenefick, a 1974 graduate of Highland Park Senior High who bought the building that now houses Dixie's, Saji-Ya and Emmett's Public House 35 years ago, has partnered with the St. Louis Park-based development firm Reuter Walton and is in the process of seeking city approval.

The new building would retain Emmett's and Saji-Ya while adding a third business — perhaps a local minority-owned restaurant or retail store — in 10,000 square feet of commercial space on the ground floor. A total of 79 market-rate apartments would occupy four floors above that.

A setback along Grand in the shape of a U would provide a plaza-like space for public art, benches and events.

Neither the Dixie's name, nor the restaurant, will carry on, Kenefick said. "The name Dixie's is not socially or politically correct and I'm sensitive to that," he said. "It's time to make a change."

A proposal four years ago to replace Dixie's with a mixed-use project met stiff neighborhood resistance.

This time, Kenefick said, he's tried to involve neighbors from the start. The developers and Kenefick have held a couple of public meetings, incorporating some neighborhood suggestions into their plans — such as moving the loading dock from the alley to the front of the building, he said. In addition, the building's design incorporates architectural features found in the surrounding area.

Simon Taghioff, chairman of the Summit Hill Association's Zoning and Land Use Committee, credited developers for seeking community feedback from the start.

The association is scheduled to discuss the project again Wednesday night. Such inclusion isn't common, he said.

"We have 7,000 people who live in this neighborhood, and we have bent over backward to make sure their perspectives were heard," Taghioff said, adding that neither the committee nor the Summit Hill Association board has taken a position on the project.

"The neighborhood recognizes we need development and investment on Grand Avenue and we haven't had a lot of that in recent years. If we want Grand to survive as a vibrant and active street, we have to have investment in some form."

First, though, the project needs a variance to the East Grand Avenue Overlay. The 2006 zoning ordinance was created to protect small shops by limiting new development to 75,000 square feet or three stories or both. Although it was meant to keep big national chains from pushing out small shops, it stands in the way of developments such as this one.

"What it means for us as a neighborhood is we really don't have any power to say 'yes,' " Taghioff said.

Jim Rubin, who owns the building next to Dixie's, said he favors the project "for a lot of reasons." It will look better, work better and, he said, more housing is good. Like others, he said Grand Avenue needs more life.

"Grand Avenue is nice and quaint," he said. "But the reality is all urban centers are increasing in density and we have to figure out a way to do that as intelligently as you can. Do we want Grand to stay in the Dark Ages?"

Marquita Oleson isn't advocating for the Dark Ages. But, like Kucera, she owns a condo right across the street. She fears that the increased traffic and noise will damage the quaint, small-town aesthetic that drew her to the area last summer.

Oleson said she isn't against change. However, neighbors need to advocate for the kind of place they want to live.

"I understand neighborhoods change," Oleson said. "But you should have the right kind of change."

James Walsh • 612-673-7428