PEABODY — City councilors have unanimously approved a Special Permit allowing construction of three floors of housing downtown, at 34 Railroad Ave., to be built atop an existing ground floor that will house a restaurant. 

Despite enthusiasm over the concept, the vote, during the council’s meeting Thursday, came with misgivings.

Councilors expressed disappointment when Jack Keilty, the lawyer representing property owner James Kaloutas, could not say if the 15 housing units would be apartments or condominiums — the latter would be expected to attract a more stable population. Concerns were also raised over parking, particularly when adjacent Leather City Commons hosts an event.

Most worrisome, however, was the fact Kaloutas, a painting contractor, is not slated as developer. He hopes to sell the property, the permits and the idea to someone else. Councilors questioned whether what they were seeing — including a rendering of a smartly designed four-story structure — is what they will be getting. Some noted they’d been victimized in the past by developers who failed to deliver what they had promised. 

To prevent that from happening here, councilors required numerous conditions on the permit. For example, any new owner will be required to appear before them when the special permit is transferred. 

Kaloutas, whose business is a few doors away, explained that he had hoped to expand into the 34 Railroad Ave. property but found it too small. Then he considered a three-story residential housing project, but it was not financially viable. “The city of Peabody came to me and said, ‘This would be a great place for ... a restaurant,’” he said.

Three floors of residential space could make the restaurant work, Keilty said, but “A deal of this size and scope is not in (Kaloutas’) wheelhouse.”

“This is an exciting project,” said Ward 2 Councilor Peter McGinn, whose district will host it. He noted underused public parking spaces near the site and suggested that the conditions on the special permit would help insure that the project is not altered. “I support the special permit.”

Councilor at-large Anne Manning-Martin urged making the plans be part of the record. “Because otherwise it’s just beautiful pictures that we’ll never see again,” she said. Diagrams of the project are detailed down to the size of the restaurant, with a capacity of nearly 300, and the size of its bar. 

“I don’t like what I’m hearing,” said Ward 6 Councilor Barry Sinewitz. He lamented the possibility that these dwelling spaces could be “low-income apartments” with negative consequences for seniors in nearby Tannery Apartments. 

“It’s always a question,” Keilty explained, “whether the banking industry is in a mood to invest in condominiums or apartments.”

Keilty conceded that no buyer for the project has yet been sought. “If residential markets stay as hot as they are I think this will go rapidly,” he said. At the same time, he cautioned that the conditions and high-end concept make it more difficult to sell. “We have to attract someone who has confidence in the city of Peabody.”

While some were eager for conditions, at-large Councilor Dave Gravel worried that they complicate matters at a time when the city is working hard to revitalize downtown with restaurants and pubs. “I’m very familiar with that area. It’s a pit,” he said. “Right now we don’t have parking problems. Nobody uses those spaces.” 

Gravel recalled abandoned cars, trucks selling fish off the back, “and the occasional exchange of brown paper bags” (an apparent reference to drug activity). “Anything that brings life, creativity, an attractive venue, is nothing but a plus.”

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