Affordable-housing issues cost it a vote, but a $1 million incentive for a shopping-center makeover won City Council approval last week.

The incentive goes to Hawthorne Retail Partners, a Charlotte developer, if it completes its proposed University Marketplace at South Square.

Hawthorne’s project is designed to include 105,000 square feet of retail space, a 625-space parking deck and 330 residential apartments at the former Regency Plaza shopping center, near a station site for the proposed light-rail line between Durham and Chapel Hill.

Economic Development Director Kevin Dick said the project will “add aesthetic improvements to an area that is blighted and has been vacant for eight years.”

The $58.5 million Marketplace, Dick said, will create 370 permanent jobs and 320 jobs during its construction, add substantially to the city and county tax revenue and spur investment in the South Square area.

“This project would ... spur development, redevelopment, renovation ... in an area of Durham that is currently depressed and stagnant,” said Joe Jernigan, an area property owner who runs a commercial real estate company.

At an August work session, though, Mayor Bill Bell and some City Council members hesitated to embrace the project’s incentive because of dissatisfaction with plans for “affordable” apartments.

Hawthorne has pledged 15 percent of the units for tenants with incomes below 80 percent of the area median. Their rent would be below market rate, such that the tenants would pay no more than one-third of their monthly gross income for housing.

Durham, though, has an identified need for housing that is affordable to much lower incomes, and Bell wanted to investigate further subsidies provided by a third party or the developer.

At last Tuesday’s council meeting, Dick said his research found extra subsidies would jeopardize the entire project, and the housing issue “should not be seen as a deal breaker.”

Bell was not at the meeting. Councilwoman Diane Catotti said she opposed the incentive because of the lack of lower-income housing, and because she preferred incentives be given for projects in areas closer to the city’s center.

Catotti and Councilman Steve Schewel cast no votes, but the incentive passed 4-2.