A development project in Old Town Alexandria that sailed through the Planning Commission last year and is scheduled to break ground later this month has suddenly become controversial.

Some merchants along the 100 block of King Street are mounting an 11th-hour fight against a planned three-story office complex directly behind their stores. They fear it will block off a city-owned alley and leave them with no way to get their deliveries in or their garbage out. The development project already has received city approval and, unless delayed, will begin in a few weeks.

The merchants are charging that the city ignored their interests when it negotiated with the developer, and Mayor James P. Moran Jr. says he agrees that the city has not been entirely fair.

"I think we have a serious problem here," said Moran, who is considering holding a special public hearing on the issue on July 23. "The city is essentially saying that the parking garage takes precedence over the stores and I don't think that's quite fair."

"The building is going to cause an immense difficulty in the alley," said Gordon A. King, who owns Bullfeathers Restaurant in Old Town and is leading the drive to delay the development. He said the city first forced the stores to use the alley by restricting deliveries on King Street, and that now the city is effectively eliminating use of the alley, which runs between South Union and South Lee streets.

The dispute centers on a Los Angeles developer's plans to build a 60,000-square-foot building with an underground parking garage, retail space and offices at 115 South Union St., currently the site of a public parking lot two blocks from the waterfront.

The 10-foot-wide alley will lie between Newco Management Co.'s 48-foot-high building and the back of the King Street shops and will serve as the entrance to the parking garage. The alley is now lined with garbage dumpsters and often is congested with unloading delivery trucks.

King said he and other store and restaurant owners on the block recently received letters from City Manager Vola A. Lawson telling them to remove their garbage dumpsters from the alley. "She wants me to cart my trash a couple blocks away," he said. King said he raised his objections so late because he and others mistakenly thought that the City Council had to approve the plan after the Planning Commission. "I don't think the notification process was clear to us," he said. "The city can claim that I was ignorant of the proper procedures and they would be right."