Inside the dank and spacious Holman Antique Plaza on Pacific Grove’s Lighthouse Avenue, Nader Agha works his magic: schmoozing with customers, steering employees, and selling five figures’ worth of Chinese relics in the space of an hour.

But while business can be good, two of the Holman Building’s six stories are vacant, and Agha has other plans for the block-sized property that includes retail stores and two smaller structures. He shuffles through a series of Mission-style renderings of the proposed 250 – to 400-room Royal Monarch hotel and conference center, and points out a city-owned parking lot behind Lighthouse Cinemas that he wants to turn into a multi-story parking garage with affordable housing on top.

When Agha bought the Holman property at an auction in 1995, the developer – whose Monterey County holdings stretch from Moss Landing to Carmel Valley – wanted to raze the existing building and replace it with an oceanfront hotel. The antique mall, he says, is really just a placeholder. Water limitations, historic building protections and other constraints have stalled his plans; last year Agha listed the property for sale at almost $11 million. “It’s not an easy situation, socially, economically and historically,” he says ruefully.

“WHO WANTS THE HOLMAN BUILDING SITTING THERE MOSTLY EMPTY? NOBODY.”

City officials also want to turn the site into a bigger cash cow. Councilmen Bill Kampe and Alan Cohen, who teamed up to study the Holman site, figure a 300-room hotel could bring in more than $2 million in annual hotel tax, and the tourist influx could generate $110,000 per year in additional sales tax revenue. On Dec. 2, the City Council struck an agreement with Agha on a market feasibility study for the project. Agha will pay for the study, which will be provided to the city by the end of March. The city, in turn, agrees to hold timely meetings and reviews, and hire a contract planner if a hotel is deemed feasible.

The study may also sort out legal restrictions on the site. Although a 1994 ballot measure zoned the block for a hotel, height and density restrictions could cramp Agha’s vision for a 300-room landmark. And if the Holman building is added to P.G.’s historic resources inventory, Agha may be prohibited from demolishing the 85-year-old structure.

Another hurdle is water. The site’s current allocation of 9.2 acre-feet won’t supply the 16,000 daily gallons needed to supply 300 rooms. Agha proposes an on-site desalination plant drawing from a 20-foot well in the building’s basement, which could produce 24,000 gallons per day, with the surplus flowing to other P.G. properties. “All that I have to do is have a [storage] tank on top of the building, and gravity will take it to all of the rooms,” he says. “Easy.”

Kampe thinks the new agreement on the marketing feasibility study will spell out the specifics of Agha’s proposal and allow both parties to move forward. “We need some way to fundamentally break an impasse in terms of action on the site,” he says.

But the vote was a tight 4-3. Councilwoman Lisa Bennett, who joined Mayor Carmelita Garcia and Councilman Robert Huitt in opposition, says the agreement is premature.

“Who wants the Holman Building sitting there mostly empty? Nobody. That’s dumb. It should be one of the major generators of income for the people of Pacific Grove,” she says. “If the property owner were to apply with a project that did not violate existing law, we’d be more than willing to entertain that application. Nothing I’ve seen so far fits in with either scale or style.”

While the city’s tentative support encouraged Agha to take the building off the market, he’s disappointed the agreement didn’t get unanimous backing. “Anyone who has the best interests of Pacific Grove in mind will go out of his way to support any healthy project,” he says. “Economically, this project is going to be the best thing ever to happen to Pacific Grove.”