Oak Bluffs voters this week narrowly defeated a proposal to include the North Bluff section of town in the Cottage City Historic District.

At Tuesday night's special town meeting, voters also argued over how much money a resident could earn and still qualify for town-subsidized property for affordable housing.

In the end, voters opted by majority voice vote to qualify households making up to 140 per cent of median income in Dukes County - a level that advocates said would include people such as teachers and police officers in the program.

Voters also approved a proposal to shift 52 Narragansett avenue from residential to business zoning and decided to pour $500,000 from free cash into the town stabilization fund.

They went on a spending spree to purchase two new trucks, a new boat for the harbormaster and gutters and chimney and roof repairs at the Oak Bluffs School.

A total of 149 registered voters attended the meeting, which was held at the Oak Bluffs School. The meeting concluded in slightly more than 90 minutes.

Lengthy debate ensued at the meeting over the proposal by the resident homesite committee to delete a section from the town bylaws that limited eligibility for resident homesites to households making $38,500 or less per year.

Homesite committee chairman Jim Rankin said lenders were refusing to qualify applicants for mortgage loans at that income level. The committee proposed dropping the income requirement from the bylaw.

But a number of voters, including Ron DiOrio, were loath to remove any income rule whatsoever. In response, Mr. Rankin said the resident homesites were intended for households making from 80 to 140 per cent of the median income for Dukes County. The stipulation is included in the proposed homesite deeds.

Mr. DiOrio, who also is president of Vineyard Habitat for Humanity, said that opens the door to single residents making up to $64,800 a year, and four-person households making up to $92,500. He said that an upper limit of 120 per cent - which would translate into limits of $55,600 for a single person and $79,300 for a four-person household - would target the program to a more appropriate population. He moved to amend the proposal accordingly.

"These lots are financed by the taxpayers," Mr. DiOrio said. As such, he said, they should be set aside for people who find it more difficult to buy housing.

Police chief Erik Blake asked voters to defeat the amendment. At present, Chief Blake said, very few Oak Bluffs police officers own their own homes.

Even at a income level of 140 per cent, selectman Gregory Coogan said, many people, including teachers and police officers, would find it difficult to buy into the current Oak Bluffs real estate market. "We realistically are losing that part of our work force," he said.

On a majority voice vote, the voters defeated Mr. DiOrio's amendment.

The chairman of the finance committee, Mimi Davisson, then sought to amend the article to place an upper limit of 140 per cent in the bylaw, and not just in the homesite deeds. Voters approved her amendment.

A proposal by the Cottage City Historic District Commission to absorb the North Bluff into the district ran into resistance. The proposed district would have been bounded by Circuit avenue extension, Sea View extension and Oak Bluffs avenue.

"The real estate pressures on Oak Bluffs are tremendous. We see a lot of pressure to tear buildings down," said commission chairman David Wilson.

Roger Wey, chairman of the board of selectmen, asked voters to approve the expansion, which he said would help protect an area that Oak Bluffs residents especially care about. The North Bluff is the center of a controversy over a three-story building constructed last year by Oak Bluffs businessman Joseph Moujabber.

Michael Santoro, general manager of the Atlantic Connection on Circuit avenue and the owner of Lookout Tavern on the North Bluff, questioned including the North Bluff's commercial properties in the historic district. Renovations would cost more, and the historic value of the commercial buildings is questionable, he said.

The article required a two-thirds vote to pass. Town moderator David Richardson said the article passed on a voice vote, but Mr. Santoro called for a hand count. That vote was 80-43, so the proposal failed.

Another lengthy debate took place over a proposal by William (Chuck) Sullivan to change the zoning of 52 Narragansett avenue from residential to commercial.

Under the proposal, the business zone would expand slightly to include property at the address, which consists of two lots. Mr. Sullivan, an architect and a member of the Oak Bluffs zoning board of appeals, said he wanted to provide office space for both his own business and other businesses in town.

He plans to move an existing house from its current lot to the other lot, which is vacant, and build an office building on the vacated lot.

At a public hearing Jan. 12, the planning board voted 3-2 against recommending the proposal. Planning board chairman John Bradford said that while members felt the proposed use was benign, the change also would open the property to any use allowed under business zoning.

On Tuesday night, Barbara Peckham argued against the proposal. "I'm very concerned about the B-1 moving up the street. Once B-1, always B-1."

But Christine Todd argued that any changes in use would have to go back before several town boards for approval. Voters rose their hands, 97-37, to approve the proposal.

The following day, town clerk Deborah Ratcliff questioned the inclusion of the article on the meeting warrant, since Mr. Sullivan had gathered only 67 signatures on his petition to put the proposal in front of voters at the special town meeting. Signatures from 100 voters are required to place an article on a town meeting warrant.

=Mr. Bradford said state law allows the owner of a property to petition the selectmen directly to place a zoning change on a warrant. Mr. Sullivan and his business partner, Maurice O'Connor, bought the property Dec. 9 for $475,000.

But last November, when Mr. Sullivan approached selectmen, the board debated his request and voted unanimously to place his proposal on the warrant for the annual town meeting in April, when zoning changes are traditionally considered.

Other town meeting action was devoted to money matters.

Voters quickly and unanimously approved using $257,250 from free cash to buy a dump truck which can do double duty as a sander for the highway department for $105,000 and a compact four-wheel drive for the board of health for $16,000. The appropriation also included $38,250 for repairs to the roof, chimney and gutters at the Oak Bluffs School.

Voters decided to take $81,000 from the ferry fee fund, derived from a 50-cent fee on ferry passengers departing Oak Bluffs, and use the bulk of it - $50,000 - to replace the harbormaster's boat. The remainder went to bulkhead repairs, handicapped ramps to the harbormaster's office and improvements to the public restrooms by the Steamship terminal.

In other action, town meeting voters approved more than $110,000 in transfers from free cash to buy land near town hall, cover expenses associated for two special education students from town and stipends for town employees who didn't receive salary raises this year.