Despite the urging of hundreds of Summit Hill residents, the St. Paul City Council voted 5-2 Wednesday to deny an appeal that could have shelved a five-story, 80-unit mixed-use development on the site of Dixie's on Grand. With the council's vote, and barring any new challenges, the $32.5 million development can move forward.

Council Member Mitra Jalali, who moved to deny the appeal by a group called Friends of a Better Way, said the city's Planning Commission got it right back in July when it voted 9-1 to approve height and building size variances. She said the project is in keeping with the character of the surrounding neighborhood — despite its planned height of nearly 60 feet and its more than 100,000 total square feet of space.

"It is clear that the project will not alter the essential character of the area," she said, pointing to design elements drawn from historic homes and apartment buildings.

But Council Member Rebecca Noecker, who along with Council Member Jane Prince voted against the project, said the building will be too tall and too out of step with the shorter, smaller buildings that make up much of the neighborhood. Many of the area's older apartment buildings are no more than three stories.

Noecker said the project's developer has not proven why variances are needed, other than to make more money. She said she would have denied variances that will allow the building to be nearly 20 feet taller than its adjacent neighbors.

"We need to follow the law. What is relevant here is not whether we want to see this project or not," Noecker said. "I do not see a reason why this building needs to be this tall."

The vote reinforces a move last month, in which the council voted 4-3 to rezone the area around Dixie's to allow a larger development.

For months, opponents argued that the building's size doesn't fit with a Grand Avenue commercial corridor dotted with bungalows and brownstones, many of which house small offices and boutique shops. But supporters argued that building height and size limits put in place years ago — in large part to prevent huge national chains from overwhelming the street — have also dampened substantial local development. There has been little new mixed-use development anywhere on Grand in years.

Grand, they say, is in desperate need of the vitality that new restaurants and market-rate apartments can bring. Peter Kenefick, co-owner of the one-story building and parking lot that has been home to Dixie's and two other restaurants, said he thinks this project will eventually win over its detractors.

"Now the real fun part comes, and that is raising a real gorgeous building for that neighborhood," he said. "What this means to me is my family, myself and my team can have a say in what goes on a property that my family has owned for more than 30 years."

The project would include four ground-floor commercial spaces: two for existing restaurants Emmett's and Saji-Ya, and two for new businesses. A setback along Grand in the shape of a "U" would provide a plaza-like space for public art, benches and events. Kenefick plans to retire the Dixie's on Grand name and replace it with a new concept.

After months of community meetings and working with area business owners and residents on design concepts and neighborhood concerns, Kenefick said he hopes his experience will serve as a catalyst for other developments — and Grand Avenue's revival.

"If this building comes out the way we envision it, hopefully it will inspire others to be just as thoughtful," he said. "I hope we set the standard for what needs to be done … and how to do it."