Amesbury – The Amesbury Municipal Council has approved development of the almost 25-acre tract at Bailey’s Pond on the southern side of Interstate 495. In a special municipal meeting on Tuesday night the council unanimously approved the agreement executed last month by Mayor Thatcher Kezer and Fafard Real Estate.

That vote is the first step in the city’s approval of the Millford developers’ plans to build up to 200 new homes on the property at Route 150 and Interstate 495. It is near the Merrimack River across the river from Maudslay State Park. The development may also include some retail space and a golf course.

Fafard now has 60 days to file for development permits with the elected city planning board.

The agreement sets a purchase price of $20,000 per house with a floor of 120 new homes and a cap of 200 new homes. That means the purchase price could range from $2.4 million to $4 million.

It also permanently prevents an adult-entertainment business from being located at the Amesbury Sports Park. Fafard, which owns the sports park, will be compensated $1.4 million for filing the permanent restriction against the so-called strip club.

“We just didn’t want to see a strip club on 495,” Kezer told the council.

Fafard could withdraw from the project if the planning board approves less than 120 houses on the site. If the real estate developer withdraws, it will have to pay the city $2 million and Fafard would still receive the $1.4 million for the restriction on the use of the sports park. That would be a net gain to the city of $600,000, the mayor said.

Council member Mary Chatigny summed up the sentiment of the other council members. She said: “This agreement turns a negative into a positive.”

The agreement, which one resident called “almost turning lemons into lemon aid,” brings to an end years of controversy over the original agreement the city signed with Fafard in 2003.

The state Inspector General and Department of Revenue faulted the original agreement, calling it flawed, but not cancelling the agreement. That left the city with the option of renegotiating the agreement with Fafard or fighting an expensive law suit that the mayor and council agreed it would probably lose.

Both state agencies indicated they liked the current agreement, Council President Bob Lavoie said.

Lavoie and councilor Allen Neale served on a task force to assist the mayor in the negotiations.

Opposition came only from one resident who thought it set a bad precedent to set a per-house fee on the developer. The planning board would be under pressure to approve a higher number of homes to gain more money for the city, one opponent said.