An ambitious $42 million redevelopment project of low-income homes in Lexington Park has come up against county restrictions on the number of housing units that can be built close to the "fly zone" around the Patuxent River Naval Air Station.

The plan calls for tearing down Lexington Manor, also known as the "Flattops," and building 342 new units. But that number is likely to be almost halved because of a regulation called AICUZ, though the developers flatly reject such a prospect.

AICUZ, which stands for Air Installations Compatible Use Zone, is a set of zoning regulations adopted by the county in the 1970s at the urging of the Navy. It severely limits development in the area closest to the airfields at the base, for safety and liability reasons.

The Navy base "is our industry," said Board of Commissioners President Julie B. Randall (D-At Large). "That is our economy; we have to support it," she said, by preventing "encroachment" in the restricted zone.

On Tuesday, Charles County developer Louis Grasso and John Picerne of Picerne Development, a national firm based in Warwick, R.I., told the commissioners that reducing the number of units from 342 to 180 would not only increase the cost of construction but also raise rental rates.

"For what we have to do, a lesser density, that's going to be the largest single hurdle," Picerne said. To the developers, the projected number of units is a magic number, the threshold to make the project economically viable, he said.

Grasso and Picerne are applying as a team for $25 million in tax-exempt bonds from the Maryland Department of Housing and Community Development. They expect to invest $6 million in the project and finance the rest of the cost through tax credits.

Under their plan, a mix of two-, three- and four-bedroom units would be built at the Lexington Manor site after the existing units are demolished. Streets and sidewalks would be rebuilt, and the neighborhood would have its own 6,000-square-foot community center, complete with a gym and a swimming pool.

Commissioners called the plan "a dream" and agreed with developers that it could be an important piece of revitalization plans for Lexington Park. It would replace the concrete-block, flat-roofed military housing built in the 1940s. The Navy sold the homes and land in the 1960s to John Chamberlin, a local landowner.

Only about 175 of the original 342 homes are now occupied, and many of them are dilapidated. Because Lexington Manor is in the AICUZ zone, commissioners would like to limit the number of new units to the number currently occupied.

In a rousing presentation to the commissioners on Tuesday, Grasso said over and over that he and Picerne "have a legal right" to develop 342 units at the site because that is what the county's own regulations allow.

Grasso and Picerne also noted that inside the base, the military has built many new buildings in the flight path of airplanes. In addition, the county's own redevelopment concept for Lexington Park calls for a town center and office buildings just north of Lexington Manor, developments far more concentrated with people than the proposed new Lexington Manor.

Grasso suggested that there is a double standard in the application of AICUZ, saying that even the proposed 342 units on a 70-acre site would not be very dense.

But Randall replied, "I think density [in an AICUZ area] is absolutely going to be my show stopper, and it's going to be your show stopper."

The issues of AICUZ, density and development played an important role in the commissioners' recent decision to relocate the Lexington Park library from its present site near Lexington Manor to a site about a half-mile away--and out of the AICUZ zone, Randall said.

"From our perspective, encroachment is a huge, huge issue," Randall said. As the county competes with Edwards Air Force Base in California for a new weapons research project on the Joint Strike Fighter plane, "one black mark called encroachment" could take St. Mary's out of the running, she said.

The Joint Strike Fighter project could bring thousands of new jobs and hundreds of millions of dollars into the county. At Edwards, Randall said, encroachment is not an issue because the community closest to the base is 45 minutes away.

County Commissioner Shelby P. Guazzo (R-Chaptico) said that the county's redevelopment plans for Lexington Park also may conflict with a new set of zoning regulations, the Unified Land Development Code, now under review by the commissioners. The new zoning ordinance "eliminates all residential development" from the restricted fly zones, Guazzo said.

"We've done some pretty extensive analysis. I'm not sure what else we can do," Picerne told the commissioners.

After the meeting, a disappointed Picerne said he "will reanalyze the location of the housing units."

Randall encouraged the developers to look into reconfiguring the site.