PROVO — The Provo City Council voted 5-1 Tuesday night to change a city ordinance and finalize a deal that will save the historic Maeser School.

The council authorized a new, unique zone for the block where the century-old school stands. The new zoning designation allows the Provo Housing Authority, a not-for-profit organization, to renovate the building for 32 senior housing apartments and to build 12 single-family homes in the school's park area.

Neighborhood residents asked for an opportunity to purchase the park land to preserve it as open space, and the council agreed to create the zone with a provision for a park.

"There's more to revitalization than new houses," resident Steve Nibley said. "It's very important to the quality of life to have parks."

Housing authority director Doug Carlson said he was willing to hold off on the sale of the 12 lots for the homes for 45 days to give the neighbors a chance to raise funds and make a bid.

The housing authority purchased the block last year from the Provo School District for $750,000 and earned approval from city staff and the zoning commission for its project.

However, the deal nearly went off the tracks two weeks ago when investor York Galland came forward with an offer to buy the block, renovate the building and reopen it as a private school.

One school district representative expressed the wish that Galland had surfaced two years earlier.

Carlson announced Tuesday he had rejected Galland's $821,000 offer, which he said represented barely half of the housing authority's expenses and opportunities.

The housing authority's complex deal is designed to revitalize not only the Maeser block but lots in five of Provo's Pioneer neighborhoods — Maeser, Joaquin, Dixon, Franklin and Timpanogos. The deal's complexity made it impossible for Galland and Carlson to reach an agreement.

"It became clear we couldn't pay more than appraised value and Doug was too far into it to sell it for appraised value," Galland said.

Carlson said the housing authority needed $1,535,000 to sell the block at 150 S. 500 East.

"We had indicated to him we would not consider divesting of the property for anything less than what we had expended on the project including our opportunity costs for the grant and revitalization."

The authority is required by its funding sources, including the Federal Home Loan Bank of Seattle, to build or renovate 43 housing units for first-time buyers in central Provo by October 2007. Neighbors hope to purchase the park for $420,000, the amount the housing authority needs to net from the sale of the 12 lots in the park to make its deals work.

The neighbors also would have to raise money to maintain the park and help the housing authority find 12 other lots in the area to meet the requirements of grants secured by the housing authority.

One resident spoke against the proposal to preserve the park.

"I don't know that putting a large, large park in the middle of this problem area is going to solve our problems," Stephanie Booth said. "It could be a money pit to keep up with maintenance and security. Many residents have said they don't consider it a safe place to play for their children.

"I think what we really need is 12 new home owners, some happy, smiling faces to help us fight back against the vandalism and the crime in the neighborhood."

Carlson was relieved to see the foundation of the deal accepted.

"I'm gratified the Ccouncil saw fit to approve the zoning petition that will allow me to proceed with the funding provisions to preserve the Maeser School," he said.

E-mail: [email protected]