The Seattle City Council voted Monday to waive more than $500,000 in permit fees to help a real-estate developer build a special street in South Lake Union.

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What’s a woonerf? That’s what Seattle City Council members needed to know Monday before approving a South Lake Union real-estate development deal.

Woonerf (pronounced VONE-erf) means “living yard” in Dutch, and city planners use the term to describe a parklike street where pedestrians and bicyclists are given priority over motorists.

The council voted 6-2 to waive about $528,000 in permit fees related to the construction of two new office buildings along Eighth Avenue — in exchange for the developer, an affiliate of Vulcan Real Estate, remaking the street as a woonerf.

Councilmember Tom Rasmussen, who sponsored the bill authorizing an agreement with the developer, City Investors VII LLC, said it will cost an estimated $2.1 million to build the woonerf between Thomas Street and Harrison Street. The cost of rebuilding the street after construction with no special features would be about $475,000, he said.

That means the city will ultimately net more than $1 million “in pedestrian-friendly improvements,” Rasmussen said, calling that outcome a great return for taxpayers.

The woonerf matches the city’s neighborhood plan for Eighth Avenue North, which envisions the route as a shared-use street, he said, because the deal “will result in more landscaping, wider sidewalks and more open space.”

Councilmember Mike O’Brien, one of the two dissenting votes, countered that view, saying the city has envisioned the street as a residential corridor, not a corporate park.

“I am concerned that the street design, as proposed, would result in a private amenity for the proposed campus in the public right of way,” O’Brien wrote in a memo.

“Though the developer is proposing to contribute more funding than is required to for the rebuild of the street, I do not find there to be sufficient public benefit in the proposed design to warrant the $530,000 investment from the city.”

Before voting against the bill Monday, O’Brien added, “I would rather see public investment in pedestrian improvements in a (residential) location.”

Rasmussen brushed off O’Brien’s warning, saying South Lake Union residents will benefit from the woonerf. The Low Income Housing Institute (LIHI) operates a 50-unit building on the corner of Eighth Avenue North and Thomas Street, and there are more than 2,000 new residential units in the pipeline for the neighborhood, he said.

Mercedes Elizalde, a representative from LIHI, testified in favor of the agreement. There are now 31 children in the nonprofit’s nearby building, she said.

Councilmember Nick Licata, who backed the bill, sponsored an amendment requiring the developer to seek a “Festival Street” designation for Eighth Avenue North. He described the deal as a good way to leverage private dollars for a specific project.

Councilmember Kshama Sawant sided with O’Brien, saying the city’s money would be better spent building more low-income housing or fixing sidewalks in poor areas.

“This discussion has sounded to me a little like an infomercial — ‘If we pick up the phone today we can save $1 million on a woonerf,’ ” she said, reminding her colleagues that the new streetscape will help the developer by boosting property values.

“The question is not how much we will be saving. It’s what we will be spending and do we think this woonerf is worth the cost?”