EL CERRITO -- The city has made Eden Housing, Inc., its first choice to develop the former Tradeway Furniture parcel at 10848 and 10860 San Pablo Ave., with Mercy Housing Development as the backup.

The Oct. 18 decision by the City Council, acting as redevelopment agency, commits the city to negotiate with the Hayward-based developer to work with the staff to plan the project, including financing, then buy the property and build and manage the facility.

Eden and Mercy were among 11 respondents to a Request for Qualifications and Proposals published last April.

Eden proposes two four-story structures--a residential building with 64 affordable senior housing units, and a mixed-use building fronting on the street, housing the medical clinic, small retail stores and offices, and a common area. A breezeway bridge would connect them.

The proposal design also features an open area between the project and City Hall facilities next door.

Many steps remain before construction, however. Completion is four or five years away, senior project manager Hilde Myall told the agency.

Purchased in 2004 with $4.05 million dedicated to developing low- and moderate-income housing, the properties south of City Hall also would serve goals of revitalizing the Civic Center area and housing a community-oriented use such as a service center.

The staff recommended Eden and Mercy based largely on their strategies and experience at financing and running similar projects around the Bay Area. The economic climate has weakened federal programs created to encourage affordable housing, making viable financing strategies critical to a sustainable project.

Eden's proposal for a combined affordable-housing, retail and social services project includes a key tenant: Samuel Merritt University, which would run a health clinic staffed by medical faculty and students.

The plan relies on federal senior housing subsidies, either the Low Income Housing Tax Credit Program or the U.S. Housing and Urban Development Department's 202 Supportive Housing for the Elderly Program.

The proposal and staff report acknowledged that the federal funding is very competitive, and funding for senior services programs that the complex would offer is uncertain. But Eden touted its experience at managing complex funding and regulations at similar facilities elsewhere.

The proposal does not address an existing building on the property that the El Cerrito Historical Society has been campaigning to save as a historic structure.

The small building on San Pablo, comprising four gables, was built in the late 1920s as a sales office for a Sonoma County stone quarry, then in 1935 became Contra Costa Flowers owned by the Tomi & Hikojiro Mabuchi family. Most recently the El Cerrito Chamber of Commerce leased the front building until the city took over the property in 2008. It now stands vacant.

Before the agency selected Eden, historical society leader Tom Panas repeated his plea to "make preservation of the 10848 San Pablo Avenue site ... a requirement of this project."

In addition, former Albany Mayor Jewel Okawachi, whose family has business roots in the area, urged, "It's important that you preserve this building."

The city has maintained that a decision on preserving the building awaits a California Environmental Quality Act report later in the process.