A proposal to convert a single-room occupancy residence into housing for the homeless and mentally ill is dividing an Upper West Side neighborhood.

The Lantern Group, a developer of affordable housing, is in contract to buy a six-story building at 319 W. 94th St. Because the deal has yet to close, the building’s price tag is not public. The developer’s plan is to add three stories to the so-called S.R.O., where tenants rent out single rooms with shared bathrooms, and build a total of 141 units.

The proposal, which requires a zoning variance, received preliminary approval from a Community Board 7 committee last week. Next month, it is scheduled to go before the Board of Standards and Appeals.

Under the plan, tenants who have a history of mental illness and who are referred by the Department of Homeless Services would be allocated 60 of the units, existing tenants would take up 53 apartments, and the remaining 28 would house the working poor. There would be 12 professional support staff working during business hours and two security guards on duty 24 hours a day.

The Lantern Group’s project manager, Rafal Markwat, emphasized that applicants who wanted to live in the building would be thoroughly screened. “They are able to live independently,” he said. “It’s not a population that has to be monitored 24/7.”

A resident of the block, Paula Bassoff, said the staffing would be inadequate. “People who are mentally ill do not schedule their delusions,” she said. “I think that people who are mentally ill need a place to live; what I object to is the way they went about it.”

Among Ms. Bassoff’s concerns is that any problems arising at the building during off-hours would tie up police resources, which are already stretched thin.

Neighborhood in the Nineties, a community group, has gathered 500 signatures to petition against the project. The city has long treated the area as a “dumping ground” for the mentally ill, without providing them with adequate services, the president of the group, Aaron Biller, said.

“The pressure to create beds has overridden common sense,” Mr. Biller said. “You have people acting out on the street because they’ve been placed in this facility and the facility does not have adequate round-the-clock support.” The new landlord would allow all of the current tenants at the building to remain. One resident, Christopher Santee, said he was not concerned about incoming tenants with a history of mental illness.

Mr. Santee said that before the Lantern Group took control, the building — like many other S.R.O.s in the neighborhood — had been used illegally as a tourist hotel for seven years.

For Mr. Santee, a plan such as the one presented by the Lantern Group is the only way to keep the neighborhood’s S.R.O.s as affordable housing. “We have to fight tooth and nail to preserve this housing,” he said.