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PepperJax Grill wants to serve alcohol at its new downtown restaurant. The Salvation Army is opposed.

And to resolve the matter, the Lawrence City Commission will have to balance a tricky set of hot-button issues -- religion, alcohol and the homeless -- against its own need to pay for a downtown parking garage.

"It's a complicated set of circumstances," Mayor David Dunfield acknowledged Friday.

City code generally prohibits alcohol sales within 400 feet of a church. And Salvation Army administrator Rich Forney, whose church and homeless shelter sit across the street from the PepperJax location at 10th and New Hampshire streets, isn't interested in making an exception.

"It goes against everything our church believes in. We preach against drinking," Forney said. "It's within 100 feet of our front door -- we've got (homeless) people here trying to get off alcohol, and we're not going to let it be that close."

City ordinance allows for exceptions to the rule. Martin Moore, an owner of the Downtown 2000 building where PepperJax will be located, said that waiver was needed to help the business succeed.

"I don't think they'll be a smoky bar, but I do think some of their customers will want a bottle of beer with their cheese steak," Moore said.

The Lawrence City Commission, meanwhile, has been vocally reluctant in recent months to allow new drinking establishments downtown. But PepperJax Grill is the first commercial tenant for Downtown 2000, a development project the city would like to see succeed.

That's because the city decided to finance the project's $8 million parking garage using tax increment financing, known as TIF. Under the arrangement, the city uses all the new property and city sales taxes generated by the Downtown 2000 project to help pay for the garage.

Once the development is complete, officials hope to generate $340,000 in new tax revenue a year for the city. The 2004 property tax payment for the project, however, was $17,032.

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Meanwhile, the city is still paying off its bonds for the garage: $453,452 in 2003, $773,456 this year. Those payments will be on commissioners' minds when they consider the PepperJax application Tuesday night.

"It does have a bearing," Dunfield said, adding that he hasn't made up his mind on the issue. "Our charge is to consider potential damage to the public health and welfare. In order for us to grant the waiver, we have to find there's no harm. I think the TIF question plays into that."

PepperJax Grill officials declined or did not return calls for comment. Moore said he didn't know if the drinking establishment license would be a deal-breaker for the restaurant.

"I think they are going to be a wonderful family establishment, a great neighbor to everybody, including the Salvation Army," Moore said of PepperJax. "It's vital for our project that they are successful."

Forney was sympathetic, but only to a point.

"I'm behind the city in wanting a renter," Forney said, "but I don't want alcohol served that close to our door."

The city's agreement with developers also calls for a luxury hotel and retail/office building to be built on the site. That agreement said construction should have begun by September 2003, and complete by September 2005. There's no penalty for missing the first date; if the buildings aren't finished on schedule, the developers will owe the city $100,000.