$250 a night at the corner of posh and gritty

The word shmatta does not comfortably roll off Paul Stallings’ tongue. A tall WASP from the Midwest, Stallings grew up in a tony Chicago suburb before making his way to New York. In the late 1970s he traded in a job at a law firm to renovate falling-down buildings on the Lower East Side when this historic neighborhood was at a low point.

Stallings has since fixed up many buildings and learned the ways of the locals, including how to differentiate between a shmatta -- typically a $12 cotton dress -- and a retro designer frock now sold in hip shops along Orchard Street. The 52-year-old Stallings has become as important a figure around here as Herman Spitzer, the Orthodox Jew who has been selling shmattas for 40 years on the corner of Rivington and Ludlow streets.

And now Stallings is going to do something unimaginable: He is going to plop a 20-story designer hotel on a site that was once Schmulka Bernstein’s sau-

sage-making plant -- and in the middle of a neighborhood that has seen pushcarts, pickle stores, salsa record shops, tenements and drug dealers but never an invasion of conspicuous consumers who will want to observe from a distance the immigrant struggle like some fascinating floor show. The Surface Hotel, set to open in September, will have most of the standard hip accouterments, including flat-screen TVs in every room. For those of us who once had a grandmother named Sadie in this neighborhood, this is shocking news. New York swallows its history, but the thought of my tiny Sadie’s ghost, in her support hose, sipping a pink Cosmopolitan in hotel named for a fashion and design magazine, is too much to take.

For the first time in its storied history, this neighborhood is being remade not only by the new poor but also by the new rich. For generations, waves of immigrants escaping pogroms and poverty made their way from Ireland, Italy, Germany and Eastern Europe to the tenements and sweatshops of the Lower East Side. Immigrants are still coming, still fleeing poverty and oppression. Now they come from outlying provinces in China and Latin America to work (still) in sweatshops and live (still) in cheap tenement apartments.

But instead of competing with immigrants from other countries for space and briny pickles and good cheese, they are up against young hipsters escaping high rents and Starbucks, seeking a new territory for their art galleries, sex toy shops, edgy bars and eclectic boutiques. This is their unspoiled frontier east of a Soho that was once bohemian but now looks a lot like a New Jersey mall. (Even Bloomingdale’s is opening a branch there!)

Stallings, who has devoted 25 years to renovating the Lower East Side, does not want to spoil its character. He knows that the attraction of the Surface will be the “authentic” experience of staying in a gritty neighborhood with a good night life and then retreating to a comfortable hotel with big rooms and floor-to-ceiling windows ... which look out onto tenements.

Much the way my Sadie probably dreamed of owning her own house with a lace-covered table for Sabbath suppers, Stallings has his Lower East Side dreams too. His involve a young creative person, say, a musician, who dared to rent one of his renovated apartments 20 years ago when the area was overrun by junkies and squatters. Now that musician is in his 40s and is perhaps an industry big shot on a business trip from L.A. looking to have a drink in a hotel lounge where half the people have paint on their jeans.

“I wanted to create a hotel that wasn’t in a bubble existing separate from the community,” Stallings said, noting that area residents will get priority reservations at a yet-to-be-named but sure-to-be-cool hotel restaurant.

During a tour of the $250-a-night rooms at the Surface, a woman in a housedress emerged from her apartment in an adjacent tenement and began hanging her laundry on the fire escape. “That’s what we want people to experience,” said Amador Pons, the 28-year-old hotel architect, first pointing to the woman sunning her laundry and then sweeping his hand across a cityscape of tenement rooftops and East River bridges.

Stallings has gone to great lengths to protect that experience, buying the air rights around the hotel and declining to take over the lease of a grungy hardware store next door. Thrusting his hands into his jeans, he insists he wants Spitzer’s son Ziggy to keep the corner dress shop open for a long time.

The neighborhood is full of odd juxtapositions and ironies. At a coffeehouse on Hester Street, a young man wearing a nose ring also wears a button that says “Free Palestine.” In Sadie’s day that would have meant free Palestine for the Jews. Now it means free Palestine from the Jews. Nearby, the proprietor of a just-opened restaurant named Tenement boasts a menu of “comfort food” like they used to eat in the old days. Sadie might have gone for the potato pancakes but it’s a sure bet she would have passed on the pasta with smoked bacon in cream sauce.

But there is yet much for her in the old neighborhood. Sadie didn’t go in for fancy, and there are still great bargains on Orchard Street. (And she would have been delighted that one of her granddaughters, a flutist, pays almost nothing to rent studio space in a tenement basement.) After a performance at a Yiddish theater, Sadie surely would have headed for the last candy store on the Lower East Side for a bag of sugar-free suckers and some jelly slices.

Stallings says he would like to preserve the neighborhood as a place that Sadie’s ghost would be comfortable revisiting. But a chic hotel here could unleash a wave of gentrification that leaves the neighborhood beyond recognition -- another Soho-cum-Short Hills Mall.

Now the area stands on the brink of reinvention. There is a lot of plywood covering construction in storefronts. Soon, famed restaurateur Brian McNally will open a new place down the block from the Surface. And the Vanity Fair crowd is already gaga over a new art theater and celebrity chef Wylie Dufresne’s new restaurant on what was once one of the worse drug-dealing blocks in the city.

It would be easy to conclude that some of these interlopers are commodifying poverty and making a spectacle of immigrant culture. If so, it will be a bittersweet moment for generations who were once new Americans on the Lower East Side when all that plywood comes down. But Stallings and others like him are giving this area a future. It will be different from the past, but a future no less.