A plan to redevelop the Dinkydome near the University of Minnesota was dealt a blow Monday when the Minneapolis Planning Commission said the project would result in a building that is too tall for the site and conflicts with the Dinkytown neighborhood.

The commission denied Doran Development's request to rezone and grant variances at the site at University and 15th avenues, allowing a 13-story addition to the Dinkydome that would house retail tenants and 198 apartments. Bloomington-based Doran's plans also called for renovating the existing Dinkydome, a longtime landmark occupied by small offices, shops and restaurants that sits at the gateway to the campus.

"We're obviously disappointed in the decision," said Kelly Doran, the firm's founder and chief manager. He said his company will appeal the commission's decision when it is considered by the city council later this summer.

A fraternity next door to the Dinkydome recently told city planners it was opposed to the redevelopment. Ryan Ahlberg, an attorney for Chi Psi, said the proposed addition's height conflicts with existing zoning rules and is out of character with neighboring residential buildings. The fraternity, which has had a building there for almost 100 years, typically houses 25 to 30 students, he said.

The fraternity also objected to plans that would allow the new building to occupy a larger amount of space on the lot. "They'd be building right up to our property line," Ahlberg said.

The proposed addition is one story taller than the original plans unveiled by Doran late last year. The extra floor of apartments, additional parking spots and higher-than-expected costs of renovating the Dinkydome have increased the project's cost from $40 million to $60 million, Doran said. He said the project needs to have a certain scale in order to be economically viable.

Susan Feyder • 612-673-1723