The Dinkytown building housing Mesa Pizza and other businesses is safe for the time being, but it could still be demolished.

The Minneapolis City Council voted 8-4 Friday to deny Doran Companies the demolition permit for 1319 Fourth St. SE until a study can determine if the business district is worth preserving on historical grounds.

The decision will delay Doran Companies’ plans to build a six-story, $25 million hotel near the University of Minnesota, as the study could take months or even a year.

Doran Companies CEO Kelly Doran said the delay will cost him hundreds of thousands of dollars and could ultimately kill the project, since the possibility of historic designation is uncertain.

“It doesn’t make sense to beat your head against a wall,” he said. “We’ll go invest someplace else.”

Jeffrey Myers, who owns the property, said he wants the sale to go through and called the verdict a “complete injustice.”

If the study finds the property — which also houses Camdi Restaurant and Dinkytown Tattoo — isn’t worth preserving, the city would have to grant Doran Companies’ demolition permit, Minneapolis Assistant Attorney Erik Nilsson said.

The Council granted Doran approval to raze the other two properties at 1315 Fourth St. SE and 410 13th Ave. SE, but he said he won’t build a hotel without all three plots.

Ward 3 Councilman Jacob Frey, who serves the area, supported saving the building. He said the city needs to increase its high density development, but at the right pace.

“We are voting just to give this some additional thought,” he said during the meeting. “I think the thoughtful measure at this point in time would be to undergo additional study.”

Ward 10 Councilwoman Lisa Bender said historic studies take an average of one year to 18 months, which could stymie investment and waste staff resources.

Principal city planner Haila Maze said the study could move more quickly because the city did preliminary heritage research for the Dinkytown small-area plan.

“I don’t think it will have to drag on very long, because we did our homework,” Maze said. “Hopefully it will be completed within the next few months.”

City staff researched the historic merit of the three Dinkytown properties when Doran applied for demolition permits in January. Then, the city staff recommended demolition because the buildings didn’t match historic standards individually, but it added that they could contribute to Dinkytown’s historical claim as a whole district.

Doran said the city should base its decision on each individual building’s qualities, as city staff initially recommended.

“They’re basically asking the city staff to take the final twice,” he said.

Green Mill Restaurants CEO Paul Dzubnar purchased the building housing Espresso Royale and Al’s Breakfast in 2012. He said Dinkytown’s vibrancy comes from its people, not its buildings.

“I support the demolition of these buildings because I think that Dinkytown won’t change when those buildings are gone,” he said. “I think it will continue just like it has.”

The Marcy-Holmes Neighborhood Association has opposed the demolitions since Doran first proposed redeveloping the property in August. President Cordelia Pierson said she was happy to see the city take historic significance seriously.

The decision marks the first time in more than two years that the council hasn’t ultimately reversed a Heritage Preservation Commission historic resource demolition ruling.

“It underscores with developers and Dinkytown that history is important,” Pierson said.

Hanging in the balance

The results of the historic study will bring a final resolution to the controversial hotel project.

Even if the demolition had been approved, construction wouldn’t begin immediately. The mixed-use, 125- to 140-bed hotel would still have to undergo the city’s project review process.

Doran has said that his timeline requires beginning construction of the hotel this summer, which could force businesses out abruptly.

Mesa Pizza owner David Hathaway said a few weeks ago that he was still evaluating what to do with his Dinkytown franchise but will open an expansion location in Stadium Village this spring.

The University LifeCare Center, a nonprofit clinic  that specializes in women’s health, has been near campus for 38 years. Executive director Dan Saad said it will use its lease contract as a bargaining chip.

“We have a lease until 2015,” he said, “so they have to accommodate our move.”

Saad said they don’t mind moving the clinic as long as the new location has enough parking for its clientele, which hit an all-time high this year.

Camdi Restaurant has been in Dinkytown for 26 years. Owner Camdi Phan called the situation a “nightmare,” and said she wants to stay in the business district but isn’t sure where she’d relocate.

Phan said she has a lease until 2019 and also plans to use it as leverage against the developer to get a fair stake in any negotiations.

Doran attempted to buy out Camdi for $100,000, but Phan said the offer was too small and that they would need at least three times that to reopen the Chinese-Vietnamese eatery elsewhere.

“Sooner or later they have to come to the table,” she said. “I think if they have a hotel here, they probably don’t want me to stay.”