Las Vegas was founded on dreamers and schemers and dreamer-schemers. In Downtown Las Vegas, the City Council voted last week to block a motel on Las Vegas Boulevard from converting some of its units to extended-stay use. At first glance, it would seem we could cast the neighbors who opposed the measure as the dreamers, the selfless visionaries risking their livelihood to transform a moribund part of Las Vegas into a thriving community. And we could perhaps cast Yair Ben-Moshe as a schemer, a real-estate developer buying properties and trying to flip them for profit.

But in trying to move Downtown forward in the midst of a recession, the line between dream and scheme turns out to be blurry.

Ben-Moshe bought the Econo Lodge motel, near Las Vegas Boulevard and Charleston, in April 2008 for $7.5 million. He spent eight months renovating the place, installing 32-inch plasma screens and $500 mattresses in 130 rooms. He also replaced the carpet and changed the fixtures in the bathrooms. The renovations cost him $1 million and turned the down-at-heel property into probably the handsomest cheap motel in Downtown.

But hotel rates are plummeting across the city. It’s a trickle-down effect; each lower-tiered property must drop its rates to stay competitive with fancier places with more amenities. But Econo Lodge is already at the bottom of the food chain. When he bought the motel, he says, he could charge $89 to $200 a night. Now he’s lucky if he can get $29 to $49. “CityCenter is offering rooms for $129 a night,” he says. “I don’t think on their pro forma they estimated less than $500. Otherwise it would never pencil out. If they offer $129 a night, what am I going to offer?”

His solution was a proposal to convert 40 rooms to extended-stay, so guests could remain longer than a month. Though hardly anyone was staying up to the 28-day maximum allowed, he was confident he could easily find people to rent the rooms for a month or more. He says that his motel could get business from workers finishing up construction of CityCenter who didn’t know whether they’d stay in town or not. For Ben-Moshe, the move was simply about survival.

But at a Las Vegas Planning Commission meeting last month, business owners in the arts district, the redeveloping stretch of the city centered near Charleston and Las Vegas Boulevard, gathered to protest Ben-Moshe’s application for a special-use permit. Among the most vocal opponents were Funkhouse owner Cindy Funkhouser and Veronika Holmes-Litvak, owner of Gypsy Caravan Antiques.

Holmes-Litvak and Funkhouser are at the forefront of local business owners trying to create and nurture the city’s arts district, to turn the heart of central Las Vegas into something more than a blur on the drive between the Stratosphere and Fremont Street. Some of them have invested their life savings in their businesses. The prospect of Ben-Moshe’s motel going to extended-stay was unacceptable. “It’d be like the last 10 years of my life had gone up in smoke,” Holmes-Litvak says.

Neighbors doubted whether the extended-stay model would be viable. Plenty of places Downtown, notes real-estate agent Steve Franklin, are charging just $160 a week—that only comes down to $23 a night. “I just don’t see it as mode that’s going to save them or keep them afloat.”

But neighbors’ chief concern was that turning the Econo Lodge into a monthly rental would lead to a rise in crime—drugs, prostitution and the violence both can lead to. According to Metro spokesman Jacinto Rivera, who’s worked Downtown, weekly motels are a source of prostitution and drugs—though he said it’s hard to tell whether offenders are drawn to the area or to the motels in particular. Monthly motels are crime spots, too, but police tend to handle more domestic violence or disturbance calls. (There are around 50 motels throughout Downtown.)

“I probably would react the same,” says Ben-Moshe, “if I were in their shoes without knowing. I can really understand what their fears are. But they didn’t take the time to stop by and take a look. It looks 10 times better than what it did before.”

The Planning Commission denied the special-use permit on the grounds that a monthly motel would go against the city’s redevelopment aims. But because the measure came “attached” to a proposed zoning change (a bit of bureaucratic housekeeping) that passed, both were approved to be considered by the City Council last week.

“His attitude sucks,” said Holmes-Litvak of Ben-Moshe, a few days before the council met. “He’s an irate guy. He doesn’t really care about his neighbors. The only truth he told at that meeting is he’s in it for the real-estate value.” If he were a good neighbor, she went on, he would be more concerned with whether his decision would enhance the entire neighborhood, and not just him. “That’s what neighbors do. He’s not a good neighbor. We’re not in for the real-estate value. We’re in for the long-term.”

Of course, none of the opponents had been to the Econo Lodge, so after the Planning Commission meeting, Franklin and Funkhouser toured the property with Ben-Moshe. Franklin came away impressed. “I thought it went very well. I had seen that they had done some very nice improvements to the property. The rooms they had redone were very nicely redone, especially for an Econo Lodge. Seems like they’re running a very clean operation.”

But Franklin and Funkhouser still opposed the special-use permit. They were concerned that the permit would be attached to the property—while Ben-Moshe might do a good job running the place, he might sell it to a new owner who would run the motel into the ground.

At last week’s meeting, Ben-Moshe and architect Dennis Rusk tried to make the case for the extended-stay on economic grounds. But neighbors, and there were a few more this time, were not impressed with the struggling-economy argument—they complained that if Ben-Moshe could turn his motel into an extended-stay they should be able to turn their various art and antique businesses into titty clubs. Mayor Oscar Goodman joked that that sounded like a fine idea, and the joke was passed from complainer to complainer. It all seemed like a moment of forced, almost conspiratorial levity, with opponents feeling confident the council was on their side.

Mayor Pro Tem Gary Reese had already received complaints about the project. And he complained that Ben-Moshe told him that Funkhouser supported the project—when it was clear in the meeting that Funkhouser was dead set against it. “I’m really, really disturbed at this revelation here today,” Reese said. Moments later, Ben-Moshe’s architect, Rusk, tried to backtrack. “We had the distinct impression when she left that she was leaning toward a favorable impression of what we were trying to accomplish.” Reese didn’t appear to buy it.

Ben-Moshe argued that concerns about increasing crime were unfounded. “Why [would] a monthly bring it in if I don’t allow it today? It’s up to management.”

“We certainly all want to be good neighbors,” Holmes-Litvak says. “We’re all down there trying to create an antiques and art district. And bring something to the city that we haven’t had here before. As I’ve heard from him directly, he is in it for the real-estate value. So, what happens to us when he leaves matters not to him?”

Franklin says neighbors want to see old motels refurbished. “What most people would like to see is these older motels stay in business and embrace their history and move toward a boutique hotel.” He points to the Artisan or the El Cortez Cabana Suites as examples.

And yet one gets the impression that arts-district supporters, for all their talk of being good neighbors, are defining the term such that people who see things their way are good neighbors, and those who don’t are not. Maybe Ben-Moshe has less invested in the neighborhood than the arts-district leaders—though $1 million is not a small sum. But Downtown is still more a place for wedding chapels, tattoo parlors and crappy motels than for cutting-edge boutiques. In fact, the former create much of the “edginess” that downtown purveyors (in Vegas and elsewhere) claim they desire. While arts-district denizens will see this as a victory, their “our way or the highway” posturing seems somewhat misplaced (especially given the fact that Ben-Moshe can rent rooms for up to 28 days and then simply move people to another room). And their concern that he might sell to a less-committed owner is a reality regardless of whether some rooms are converted to extended-stay.

But then again, maybe their fierce defense of their neighborhood is just what Las Vegas needs if it’s going to create real livable communities. Maybe it needs more people to give a damn. Maybe 50 motels is enough. While Moshe says his long-term goal is to redevelop the site into mixed-used condos, right now the Econo Lodge is on the market for $12 million. He says he hopes to find a partner to redevelop the site—or to move on.

In the meantime, he asks, “If my property is going to be closed down, is that going to help? What am I bringing in? Am in bringing in prostitution? Am I bringing in something not there today? What we’re asking is to survive. I’m not trying to convert it to a convenience store. I’m just asking my guests to stay long instead of kicking them out. [With] more revenue comes more taxes.”

The City Council, on the strength of the show of opposition, killed the special-use permit, though Ben-Moshe can reapply in a year—and if he got the neighbors’ buy-in, there’s a possibility the council could rescind its decision. Mayor Oscar Goodman urged the neighbors and Ben-Moshe to iron out a long-term solution. “No one’s a winner on this one,” he said

“I don’t agree with that,” Funkhouser said after the meeting. “We’re happy to talk to him and have a conversation about trying to help him rent his units. Because it’s a clean, decent place. That’s not the issue. The issue is the special-use permit goes with the land.”

Holmes-Litvak and Ben-Moshe made nice at the end of the meeting—the neighbors said they’d be willing to help the motel generate business through other channels—and Holmes-Litvak notes that “the goal has to be the good of all.” But Ben-Moshe seemed unsatisfied (and a few days later he said he’s laid off five of the motel’s 15 employees). “People didn’t focus on the right thing,” he says.