By Ray Gronberg

gronberg@heraldsun.com; 419-6648

DURHAM -- City Council members voted 6-0 Monday night to allot another $355,000 to plan another attempt to redevelop the Rolling Hills area, to cover a shortfall a St. Louis company left when it couldn't come up with money to help.

The decision means that the city government will shoulder the entire $745,000 for the planning work, which is supposed to yield the design of a housing project that would include about 250 units of rental housing and perhaps about 40 owner-occupied units.

Monday's decision had been expected, as council members on Sept. 24 had voted to begin ramping up the city's contribution to the effort.

The only dissension Monday came mainly from Larry and Denise Hester, the owners of two shopping centers on Fayetteville Street who once took their own run at developing the Rolling Hills site.

Their attempt ended in 2003 when the city foreclosed on part of the site after the Hesters' nonprofit, Southeast Durham Development Co., defaulted on an $860,000 loan.

Denise Hester said city officials hadn't done enough to publicize its intentions, including the likelihood that the project will result in the demolition of existing structures.

"This is not what people in the community want," she said, adding that any redevelopment should focus on rehabilitating existing buildings.

She said that the city should instead use the money to pay for the renovation of the streetscape along Fayetteville Street and four other neighborhoods.

Larry Hester followed by saying that city leaders should involve residents of the Rolling Hills and Southside neighborhoods in the planning effort.

Mayor Bill Bell responded that the steering committee the city has set up to oversee the planning process will hold public meetings and operate openly.

The St. Louis company the city is working with, McCormack Baron Salazar, was supposed to come up with $325,000 to match the council's contributions to the planning effort.

But instead of fronting its own money, the company elected to try to raise it from local players. Its attempts fell apart as the recession set in last year.

City leaders have elected to continue working with the company anyway. They reason that because the firm's a national player in the low-cost housing market, it's better positioned to raise private and governmental capital than a local-only team would be.

The assistant director of the city's Community Development Department, Larry Jarvis, has estimated it would take at least $15 million to get the neighborhood to the point it would start attracting additional private investment.

The city is also pursuing a $31.2 million economic-stimulus grant from the federal government to help underwrite construction in the area.