NEWPORT — The city has taken another key step in giving the defunct Sheffield School another life, one whose purpose will be commercial instead of educational.

The City Council last night voted to rezone the school, which closed in autumn 2006, to limited business, which would allow it to be used for offices, small retail stores, restaurants and financial institutions.

Built 86 years ago, Sheffield School is a two-story, 34,000-square-foot building that sits on 1.5 acres at Broadway and Vernon Avenue. Earlier this year, residents told the council that they favored Sheffield being reused for commercial purposes over affordable housing.

Since then, the Planning Board recommended amending the city’s Comprehensive Plan to approve redesignating the property from institutional to commercial.

“With the potential for the city to market the excessed school, the board found that few other uses are allowed for the property as currently identified in land use terms. Although the Sheffield School property could be developed as a multifamily use that conceivably melds with the surrounding residential, largely single- and two-family uses, the board was not convinced residential alternatives for Sheffield School are optimum,” chairwoman Naomi Neville wrote in April.

The city then successfully obtained the approval of the state to revise its Comprehensive Plan. Last month, the Planning Board found that the proposal to rezone the Sheffield site to limited business was consistent with the revised Comprehensive Plan.

That action led to the City Council’s 7-to-0 vote last night. A required second vote will take place at the council’s next meeting on Oct. 22.

According to City Manager Edward F. Lavallee, legal documents are already prepared for the city to advertise a “request for proposals” for the school building. Notices will be published on Oct. 23.

No one spoke at last night’s public hearing and council members voted without a discussion.

In other business, the council took a second and final vote on a raise for Lavallee. Councilwomen Jeanne-Marie Napolitano and Kathryn Leonard, critics of the pay hike, dissented in the 5-to-2 vote. The vote gives Lavallee a 3-percent raise to $137,248, retroactive to December.

Some council members have complained not about the raise itself, but in the context of previous raises and the possibility that Lavallee would be up for another one at the end of this year. Lavallee started at $125,000 in October 2005. His new contract will also, for the first time, allow him to sell to the city up to 100 hours of the five weeks of vacation time he receives, possibly boosting his pay up to another $6,500.

“The timing of this is wrong,” said Napolitano, in referring to the economic distress rippling across the state and the nation.

Mayor Stephen C. Waluk, an outspoken supporter of the new, 3-year pact with Lavallee, said that he has knocked on 6,000 doors while campaigning for reelection.

“I’ve not had one person mention to me a pay raise for any city employee,” he said. “It’s unfortunate this issue has become one to grandstand on.”

rsalit@projo.com