Alpharetta has scrapped plans to temporarily bar schools from locating or expanding in the city's downtown district, a proposal designed to encourage restaurants to help fill the vacant properties along Main Street.

The City Council voted unanimously Monday night to reject a measure that would have placed a temporary moratorium on applications for permits to construct or modify schools in the city's historic downtown district. The item was initially proposed because city code prohibits businesses that allow the sale and consumption of alcohol within 300 feet of a school, a prohibition that could restrict some restaurants from moving to the area.

Alpharetta has embarked on a $29 million downtown revitalization program to create a space that would lure shoppers and pedestrians. Plans call for a new municipal building, a five-acre park, a one-acre town green, a new Fulton County Library, a 450-vehicle parking garage and additional space for more merchants.

"As a result of all the work and effort that's been going into the City Center Project, there's been an interest in reevaluating all the uses for downtown," said Community Development Director Diana Wheeler.

But several business leaders rose to protest the measure, saying that singling out certain businesses already permitted to operate in the district was unfair and damaging.

Melinda Willis, director and founder of Rivers Academy, a private middle and high school located on Main Street, said she has plans in the works to expand the school into a nearby building. Rivers currently has 170 students and the new school would accommodate elementary-age students, she said.

"I share your same vision for a thriving downtown," she said. "We have a 25-year mortgage on the building, so it's in my best interest for downtown to continue to thrive."

The delay could scrap the school project, said local architect Richard Debban and commercial real estate broker Brian Patton, who are working on the expansion. Willis on Tuesday said the expansion plan had been dropped due to prohibitive costs.

Council member Donald Mitchell said he found the backlash slightly ironic, because he had been implored by local businesses to pursue every course to increase foot traffic downtown. He said it only makes sense at times to take a step back and ensure that everything is done to encourage businesses to move in.

The council also heard from two local business owners who agreed with that course.

But the council may pursue a different tack.

City Attorney Sam Thomas told council members that Alpharetta is not bound by any state law to establish a perimeter between schools and businesses that allow for the consumption of alcohol. He said the City Council could consider loosening or eliminating the restrictions currently on the books for the downtown district.