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A developer is trying to transform much of a Near East Side residential block without significantly changing the neighborhood's character.

Michael Matty and partner Stone House Development want to refurbish eight houses, demolish 11 others, and build 85 lower-cost apartments with underground parking in three buildings on a block bounded by East Gorham, North Blair and East Johnson streets.

The houses to be preserved on Gorham and Blair streets are in a national historic district, but those to be demolished are not.

Matty wants to renovate the historic homes for market-rate, long-term rentals and future owner-occupied units.

The proposed $15 million City Row Apartments on the other side of the block would double the density of units called for in a new neighborhood plan.

The developers, however, have scaled back initial plans, added features like separate entrances and front porches, and made the new apartments affordable to those making 60 percent of the Dane County median income, or about $37,000 for a family of two.

"We don't want to build a suburban-type apartment project," said Rich Arnesen, vice president at Stone House. "We want to blend in with the neighborhood."

The Tenney-Lapham Neighborhood Association likes the effort to refurbish houses and is warming to the larger project, but concerns persist that the development is still too dense and massive and doesn't conform with the new neighborhood plan, which calls for 25 units per acre. The proposed building has 58 units per acre.

Matty and Stone House presented plans to the association Monday night, and the association is expected to take a formal stand on Wednesday. The Plan Commission and City Council will make final decisions.

"I'm kind of on the fence," neighborhood association president Patrick McDonnell said. "The neighborhood is struggling with this."

Ald. Brenda Konkel, 2nd District, who represents the area, said she opposes the demolition of houses and that the new neighborhood plan promotes density along East Washington Avenue, not in more residential areas.

But the development team has made a genuine effort to address concerns, Konkel stressed.

"I do appreciate what Michael Matty and Stone House have done," she said. "I think it's a very close call."

Matty's Renaissance Property Group bought 32 properties in the neighborhood from Kozak Properties in July 2007.

Initially, Matty proposed a larger building on East Johnson Street with 115 apartments, but amid neighborhood opposition he teamed with Stone House, an expert in using federal Section 42 tax credits for low-cost housing, to rework the plan.

The plan also calls for replacing backyard parking with green spaces and community gardens.