Through some creative financing, Takoma Park officials have quelled a year-long controversy over a local property owner's plan to parcel out building lots from the grounds of the city's oldest house.

Working with both public and private agencies, the city recently negotiated a deal under which it has purchased about one acre of the Thomas-Siegler property at 201 Tulip Ave., resolving a clash between the property owner and neighboring residents over the fate of the parcel.

The arrangement will meet the financial needs of the property owner while preserving the historic parcel by converting it into a much-needed community park, according to Daniel Neal, the city's economic and community development director.

The controversy surfaced early last year when E. Horace Siegler, the son of 93-year-old Esther Siegler, owner of the property, wanted to resubdivide the land into four building lots and sell them to developers to raise money for his mother's nursing care.

However, members of the Old Takoma Citizens Association opposed the plan. They contended that the property surrounding the 101-year-old Victorian house -- the first completed after the city's founder and first mayor, Benjamin F. Gilbert, laid out the community in 1883 -- was a unique historical habitat and should not be disturbed.

The house is nestled in a large, thickly grown yard that contains some of the city's oldest oak trees. The opponents said that B. Y. Morrison, the first director of the National Arboretum, developed some of the special azaleas that cover the property, but the authenticity of that claim has been debated considerably.

The controversy was brought before city officials, who were forced to decide where to draw the line between historic value and individual property rights.

Officials decided to try to find a solution that would preserve the property by converting it into a park while meeting the financial needs of the Sieglers.

Seeking to buy time to raise the $112,000 selling price for the property, city officials contacted the Trust for Public Land, a national nonprofit land conservation organization in San Francisco.

The trust agreed to serve as intermediary, negotiating a six-month, $6,000 option to buy the property and holding the option until the city was able to raise the $112,000.

The city then called on Maryland's Program Open Space, an agency assigned to use tax revenue to buy parkland and open space. The agency recently agreed to grant the city the requested $112,000, plus $6,000 in expenses.

"The funding source meshed perfectly with our plan to turn the parcel into a park," Neal said.

Charles Richards, the Sieglers' lawyer, called the settlement fair. "It worked out to everyone's satisfaction," he said.

The city will work with the community on the use of the site, which is listed on the National Register of Historic Places and, most recently, on the Montgomery County Master Plan for Historic Preservation, Neal said.

One plan is to develop a cultural arts center, converting the property's carriage house into a gallery, with a classroom, meeting rooms and a studio for resident artists.

The grounds, dominated by magnolias, hollies, laurels, azaleas and dogwoods, might lend themselves to a passive sculpture garden. Neal estimated that 75 percent of the funding for such projects could come from Program Open Space, with the remainder from fund raising or private sources.