WESTPORT — The Planning and Zoning Commission passed amendments Thursday to make way for increased parking and a new two-story, mixed-use building off of Elm Street.

The so called “Elm Street Land Swap” represents an equal area exchange between the town of Westport and Old Hill Elm LLC and Polaris Elm LLC of property located adjacent to the Kemper Gunn House at 35 Elm St. and 36 Elm St. Five commissioners voted in favor of the amendments, while Chip Stephens abstained.

The Oct. 19 meeting began on a contentious note, with Planning and Zoning Commissioner Chip Stephens asking Commissioner Paul Lebowitz to recuse himself from the decision because of Lebowitz’ involvement as chairman of the Westport-Weston Chamber of Commerce. Lebowitz refused.

A new Business Center Retail Residential zoning district was created on the two parcels as a result of the Planning and Zoning Commission’s amendments.

“Two things are going to happen: The building that’s next to Bedford Square will be torn down and the developer will transform that area into a parking lot. It will be owned by the town but the developer will be doing the work,” said Planning and Zoning Commission Chairwoman Cathy Walsh.

“On the other side of the street, they’re going to make a mixed use building,” Walsh said. “It’s going to be first-floor retail, and then the second floor will have four housing units with 20 percent of them being affordable. The combination of that is going to be about a $10,000,000 investment on the part of the investors.”

William Fitzpatrick of the Fairfield Law Firm Fitzpatrick, Fray & Bologna represented Old Hill LLC and Polaris Elm LLC at the Commission meeting and said, “I think everyone views it as a win-win.” “You end up with consolidated parking on the South Side of Elm. You’re adding a smaller commercial building and residential units downtown which creates commercial space for new businesses, provides additional housing, and increases the tax base.”

The land swap, in the works for over a year, has passed through the Board of Selectman’s office, as well as the Board of Finance, which negotiated with the investors to pay the town $750,000 to ensure an equitable swap.

It is not yet known what businesses will fill the first-floor retail space in the new Elm Street building.