Downey Studies Restaurant Plan : Development: Residents are objecting to a proposal to replace 36 apartments with a restaurant.

City redevelopment officials are studying a plan to replace 36 aging apartments with a restaurant, despite the objections of a handful of residents who want to remain in their homes.

Hughes/Lyon Downey, a Newport Beach-based developer, wants to build a 10,000-square-foot restaurant near the northwest corner of the Stonewood Shopping Center with a $1.1-million subsidy from the city’s Redevelopment Agency. Hughes owns the Stonewood Shopping Center, which is being expanded and enclosed.

A divided City Council, acting as the Downey Community Development Commission, voted Tuesday to spend $41,000 to study the costs and effects of the project. The City Council will vote on the proposal in about three months, Assistant City Manager Ken Farfsing said.

“Over the years, cleaning up those corners around Stonewood . . . is probably what the city needs,” Mayor Randall R. Barb said after the 3-2 vote.

Council members Roy L. Paul and Diane P. Boggs voted against moving ahead with the project.

“I think it’s a tremendously costly development for the city of Downey,” Paul said.

The proposed restaurant site is occupied by the Shalimar and Downey Dells apartments, which total 36 units. Hughes already owns the Shalimar Apartments, but the developer would have to acquire the Downey Dells senior citizens apartments. The complex has 16 units.

Several residents of the Shalimar Apartments urged the City Council to reject the proposal from the outset.

Frank Nardulli, a forklift operator, said he does not want to leave his home of four years. His rent is $435 a month.

“You can leave your door open and unlocked no problem,” Nardulli said. “And it’s (the rent) reasonable for the area we live in.”

No one from the Dells seniors complex spoke against the proposal.

Farfsing said the city would be required by law to find replacement housing and to pay relocation costs for any displaced residents. The city must also replace lost rental units. Hughes has asked the Redevelopment Agency to assist with the project by buying the Downey Dells apartments and selling them to Hughes at a discounted price.

The estimated cost to the Redevelopment Agency would be $1.1 million.

The city would recover that money in about 20 years through higher sales and property tax revenue the new restaurant would bring, Farfsing said.

Hughes will begin negotiations with the owners of Downey Dells apartments now that the City Council has shown interest in the restaurant project, Hughes spokesman John Pentz said.

Pentz said Hughes would like the new restaurant to spruce up the perimeter of the mall, but he said the firm would not build the restaurant without city assistance. “No way,” Pentz said. “The deal is marginal.”

Stonewood is undergoing a renovation, including the addition of a new May Co. department store.