Developers building a new downtown Silver Spring have closed on a $12.7 million loan once threatened by fears of proposed living-wage legislation, allowing construction on the long-awaited urban renewal project to begin as soon as tomorrow.

The development consortium, led by Foulger-Pratt Cos., signed a package of loans late Friday after receiving new assurances from the Montgomery County Council that living-wage legislation will not affect the $321 million project.

The measure would require most companies that receive county contracts or economic incentives to pay employees more than twice the federal minimum wage, or $10.44 an hour. The Silver Spring project relies on $132 million in state and county funds.

An amendment written primarily by Foulger-Pratt lawyers will be introduced Tuesday by council member Derek Berlage (D-Silver Spring) to exempt from the bill all contracts and leases signed by businesses within the Silver Spring enterprise zone.

Without those assurances, Foulger-Pratt officials refused to sign loan papers less than two weeks ago, fearing the legislation would render the Silver Spring project impossible to lease.

The developers said yesterday that a council majority appears ready to support the new amendment, giving lenders, prospective tenants and themselves the confidence to proceed with construction.

"We're moving forward, cautiously moving forward," said Bryant Foulger, president of the Foulger-Pratt Cos. "We don't sense any resistance on the council to exempt Silver Spring."

The decision means that phase one of Montgomery's most celebrated urban renewal project finally will begin--more than two months after its symbolic groundbreaking. The first section includes many of the project's retail tenants, including Strosnider's Hardware, a Fresh Fields grocery store and some smaller service-oriented businesses that rely heavily on low-wage workers and would be particularly affected by living-wage legislation.

Strosnider's had threatened not to move downtown because of the bill's potential effect on its personnel costs. But the company now has signed a lease after being reassured by Foulger-Pratt.

"This thing has been up and down," said County Executive Douglas M. Duncan (D). "And it's not just been the developer but the tenants thinking about moving in."

Living-wage legislation has been passed by more than 30 jurisdictions nationwide in the three years since welfare reform began expanding the ranks of the working poor. Advocates for the poor say it is an effective way for government to use its economic clout to improve the lives of poor residents at a time of prosperity.

But Montgomery's version of living-wage legislation would be among the broadest in the nation by reaching beyond county contractors to include economic development projects. Duncan and some council members have called for that portion of the bill to be removed to protect the county's larger economic development strategy.

In the past week, Foulger and Duncan have met with Jim Edwards, head of the eponymous California-based movie theater chain that has announced plans to move into the Silver Spring project. The 5,000-seat theater complex would be built as part of the project's second phase, and Edwards has so far refused to sign lease agreements until he sees the final version of the living-wage bill.

"It was the first topic of conversation," Foulger said. "They still need to see the final proof to feel comfortable it won't affect them."

A five-member council majority tried to address those concerns with an amendment last week that, in general terms, exempts the Silver Spring enterprise zone from the bill. Council and staff members said yesterday that the same members most likely would support the Foulger-Pratt amendment and that some version of the legislation would pass.

The developers "have certainly had an opportunity to comment on what is needed," said council President Isiah Leggett (D-At Large). "There will be a living-wage bill. The question will be the details."