The City of Santa Rosa agreed Tuesday night to sell the former AT&amp;T building near Old Courthouse Square to a developer who wants to transform the eyesore into a gleaming mixed-used tower, but only after last-minute wrangling over how many local contractors would be used during construction.</CW>

The unanimous decision by a joint meeting of the City Council and the Redevelopment Agency capped a 10-month negotiation with the Hugh Futrell Corp. and triggered applause from a council chambers packed with supporters of the project.

"I can already see a downtown coming to life with this project," said Councilman Ernesto Olivares.

But there were several tense moments during the hearing as council members, encouraged by labor groups in the audience, tried to rewrite the agreement to insert new requirements for hiring local labor.

Bill Carle, executive vice president of the company, said that he and Futrell already had agreed to seek bids from Sonoma County contractors. Beyond that, Carle said the firm would agree not to go outside the county unless it would save money, result in superior product or workmanship, or because the timeline required it.

Carle also said the company would submit to an audit of its books to ensure these ground rules had been followed. "I highly suspect we'll end up with a lot of local (construction) jobs," Carle said.

But that wasn't good enough for labor groups and Councilwoman Veronica Jacobi. She sought to require that 50 percent of the workers be local, that 30 percent of the contractors have apprenticeship programs and that returning veterans be hired.

She also wanted the project to attain a Gold standard of LEED, a sustainable building code. And she wondered whether a grocery store could be worked into the project.

Carle said the company was shooting for gold status, but didn't want it to be a requirement. He also called the supermarket idea "unrealistic."

<CW-30>But Jacobi continued to press for the 50 percent requirement for locally hired workers.</CW>

Carle responded by saying there was only so much "renegotiating things on the courthouse steps" that could done on an agreement that had been 10months in the making.

"I'm loathe to put a specific percentage because I don't know what will happen from a bid perspective," Carle said.

Jack Buckhorn of the Building Trades Council of Sonoma, Lake &amp; Mendocino, urged the council to "put some more teeth" into the agreement by requiring local contractors who participate in the apprenticeship program.

But Mayor Susan Gorin pointed out that Buckhorn had never made the request previously despite months of negotiations. He acknowledged he was not involved in the process early enough.

"It should have been something I should have been on top of," he said.

Ultimately, Carle agreed to add language saying the company would try to work with apprenticeship programs.

<CW-35>The city bought the long-vacant building for $3 million three years ago and began trying to put it to some positive use.</CW>

Last year, the Futrell firm's Museum on the Square plan was selected by the Redevelopment Agency for the hulking building, and they've been negotiating what is known as a "disposition and development agreement" ever since.

<CW-30>The project calls for stripping down the five-story concrete structure, and rebuilding it with space for the Sonoma County Museum and a restaurant on the first floor, architecture and software firms on the next four floors, and up to five new stories added for residential use.</CW>

<CW-30>The city is selling the building for $1.9 million, $1.1 million less than it paid. But officials say they expect to recoup the investment from higher property and sales taxes. A staff report for the project predicted it would create 261 short-term construction jobs, 523 long-term jobs, $68 million in increased annual economic activity and $1.2 million in general fund, gas tax and Measure O property tax funds over 10 years.</CW>

Architect Don Tomasi, whose firm TLCD Architects is designing the building and taking space in it, praised the project.

"This is an opportunity to replace an eyesore with an iconic structure," Tomasi said.

The timeline is tight, however. The project already is 3? months behind schedule. The company had hoped to have it ready for occupancy by the end of 2011, but delays have pushed that to 2012.