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GREENSBORO - A debate about downtown parking may have derailed a $3.6 million development on South Elm Street - the first new building proposed there in decades.

The clash over parking spaces at the city's South Elm-McGee lot came after midnight Thursday as the City Council discussed an economic incentive request for LindBrook Development Services.

LindBrook was asking to buy part of the city parking lot and lease 11 spaces in the lot for its planned five-story mixed-use project at 324 S. Elm St.

In a tense discussion, downtown property and business owners said the proposal was unfair to other businesses that need parking for their customers.

City Council members tried to craft a decision that would allow for the development and please the property owners. Instead, neither side was happy, and the developers are reconsidering their plans.

"We're extremely concerned with the tenor of the council and the direction they are going," LindBrook President Jim Marshall said Thursday afternoon.

"Now, we are having second thoughts about whether we should do this."

The developers asked the city for an economic development incentive of a $100,000 forgivable loan to buy part of a city parking lot. It is next to the vacant lot they hope to develop.

The developer plans to use the space for outdoor dining.

"To get this development off the ground, this request is critical to our needs," Marshall said.

The developers also asked the city to lease them some of the spaces in the lot for off-street parking.

The developers redesigned the look of the building after some questioned whether it looked too modern for the historic downtown. But it was clear at the council meeting that all the questions about the development had not been resolved.

Neighboring business owners said they were pleased to see new development on their block.

But tempers flared as they told the council they didn't appreciate the development taking over precious parking spaces.

"That parking lot is the lifeblood of downtown Greensboro," said Simon Ritchy, a property owner. "We welcome them downtown, but they should have to put up with the same things all of us do."

The lot would lose 15 spaces - four that would disappear and 11 that would be leased for use by new building tenants.

"The number one question I am asked by new clients is, 'Where am I going to park?'" said John Bailey, co-owner of the salon Bailey's on Elm.

Some business owners said they also wanted to lease spaces in the lot, but haven't been able to since the city went to hourly parking.

Council members indicated they support new building downtown, but they agreed that the city should try to do something to ease parking troubles.

"You can't shut out these other businesses, especially if they have been here for a long time," Councilwoman T. Dianne Bellamy-Small said. "It's not fair to do that."

Councilman Mike Barber asked the council to approve the development and work to resolve the parking issues for area businesses quickly.

Council members turned down his motion, instead deciding to take up the issue again at their next meeting.

But their debate upset Marshall, who rushed out of the meeting in anger.

On Thursday afternoon, Marshall said the developers may consider putting a two-story restaurant on the property. Or they might wait to see the outcome of the council meeting on Feb. 3.

Contact Amanda Lehmert at 373-7075 or amanda.lehmert@news-record.com