A well-known wedge of property in the Central Area, site of the now-defunct Lloyd's Rocket service station, is being redeveloped into a fancy restaurant — but opposition from a nearby school could shut it down before it ever opens.

While supporters think developer Paula Carson's grand plan would enhance the neighborhood and make it safer, Seattle School District officials have threatened to exercise their legal authority to veto her liquor-license application. They say a restaurant with a bar threatens the security of students attending Bailey Gatzert Elementary School across the street.

Carson says that unless she can serve cocktails to customers, her plans are foiled.

"This isn't going to be a nightclub," said Carson, of Seattle. "When was the last time you went into a fine-dining restaurant and was able to order only iced tea?"

The triangular-shaped property is a gateway to the Central Area. Bordered by Boren Avenue South, East Yesler Way and 12th Avenue South, it's where the beloved Lloyd's Rocket station operated from 1971 until proprietor Joseph Lloyd died in 1996.

MIKE SIEGEL / THE SEATTLE TIMES Paula Carson is planning to redevelop the property, now an espresso stand, into a restaurant and a bar. But the property is near Bailey-Gatzert Elementary, and school officials are threatening to veto its liquor-license application.

Carson took the property over from the Lloyd family last April and, six months later, opened a drive-through espresso stand, The Rocket, which serves soups, sandwiches, small entrees, desserts and beverages. Among her customers are students from Gatzert who come by for her 50-cent drinks and two-for-$1 cream-puff treats.

Carson plans to launch a take-out barbecue stand and gift shop next to the stand and hopes to open the restaurant as the pìece de résistance. Rather than tearing down the 1947-vintage service-station building, she has gutted it to serve as the restaurant's shell.

"On a daily basis, we have customers come by who share their stories about Lloyd's Rocket," said Krystal Bronson, who manages the espresso stand for Carson. "They are excited that we are here and curious about what we are doing."

Carson, who worked in the garment industry for 30 years, has no restaurant-industry experience. She has invested several hundred thousands of dollars — beyond the costs of leasing the property, which she has agreed to eventually purchase from the Lloyd family.

When Carson took over the property, old tires had been dumped there and she found evidence of transients living inside the building, which had been boarded shut.

"People sat on the steps of the building, drinking alcohol from a paper bag," said Bill Zosel, member of a neighborhood committee overseeing execution of the city's 12th Avenue neighborhood plan. "This is a property that has not looked good for a number of years, but also one that incites a lot of fond memories for people from when the Lloyd family had its business there."

State law grants school districts veto power over liquor-license applications if the establishment is within 500 feet of a school. Peter Daniels, Seattle school-district spokesman, said the district considers each application on a case-by-case basis.

"If it is a restaurant serving liquor, that traditionally has not been a problem," he said. "But when there is a separate bar component attached to the restaurant, we generally have opposed those."

Daniels said that even though school lets out in the afternoon, Gatzert's building is sometimes open at night for school-related or other community activities.

The bar would have counter space to seat nine, and Carson said she thinks it would be used primarily by customers waiting for a table.

George Staggers, executive director of the Central Area Development Association, said the school district is short-sighted.

MIKE SIEGEL / THE SEATTLE TIMES Rather than tearing down the 1947-vintage service-station building in the Central Area, Paula Carson has gutted it so that it would serve as the restaurant's shell.

"This site was sitting vacant, an eyesore, and now we have a person willing to invest her personal resources to turn it into something that provides positive services for the community — a place to dine or get a latte," he said.

"Before she took over, it was a health hazard and a safety hazard. Instead of giving her a hard time, the school district needs to support what she's trying to do there."

The Mayor's Office, while not taking a position on the liquor-license application, is trying to get Carson and the district to negotiate a compromise acceptable to both.

"Having development there is absolutely what we want to happen," said Kris Effertz, Mayor Greg Nickels' business advocate. "The community wants it, and the Police Department wants it."

Carson has ordered a slowdown on construction because of the status of her application with the state. For strategic reasons, she has withdrawn it rather than risk its being rejected.

"If I can't get the liquor license, it's possible that the boards could go back up and it will be awful again," she said.

Because of legal reasons, the school district is cautious when commenting on its position, Daniels said. But Zosel, of the neighborhood panel, said the district needs to better explain its opposition.

"There are other areas in the district where restaurants and convenience stores [that sell alcohol] are quite close to schools," Zosel said. "It's like the school district thinks it is protecting someone, but it comes across as condescending and patronizing to the neighborhood.

"It's another example of the attitude that we in the Central Area can't have an improvement because of some unintended consequences. And that becomes a self-fulfilling prophecy."

Stuart Eskenazi: 206-464-2293 or seskenazi@seattletimes.com