A proposed project to replace a roadside Denny's with an 18-story condo tower is making its way through the city planning process.

Austin-based Ledgestone Development Group wants to build 250 condos at the 1.2-acre at 1601 N. IH-35, currently the site of an operating Denny's restaurant. The Austin City Council approved rezoning the site on first reading at its Monday meeting. 

Despite a Planning Commission recommendation to approve the applicant's original request to change the lot's zoning from commercial highway services with a conditional overlay to a limited industrial service planned development area use, the council voted to change its use to commercial highway vertical mixed-use. The site would retain its neighborhood plan designation.

The proposed project, referred to as "Denny's Condos" in city documents, would be located between IH-35 and Swede Hill, a very small residential neighborhood to its southeast, as well as the historic Oakwood Cemetery. The site is owned by the McGrane Living Trust. 

If rezoned, the site would have a maximum building height of 230 with a limit of 40 feet near East 16th Street due to neighborhood compatibility requirements.

Swede Hill's Mike Tolleson said the neighborhood has concerns about the large project, though it recognizes the need for more housing in the city. The group said it supports retaining the 40-foot height limit along East 16th Street and asked the developer to dedicate 10 to 12 percent of the site’s residences to affordable housing.