Slouching in the lobby of Salt Lake City's ramshackle Regis Hotel, John Sinclair watches his neighbors shuffle down the creaky stairs and across crumbling tile for a smoke in the sunshine.

It smells sour inside, a bit like a dive bar. A 71-year-old stroke victim trudges in, carrying a loaf of bread and 12-pack of Milwaukee's Best. A Vietnam vet grumbles about the City Hall politicians screwing the poor. Upstairs, a man sits cross-legged on decrepit hallway carpet, sipping a soda and drooling.

Off-putting as it seems, this historic slice of downtown's State Street is home for nearly 120 people. Pride and a sense of community equal to the upscale 15th and 15th hamlet waft as strong as the cigarette stink.

And Sinclair is defiant. "I work. I come home at night. I make dinner," he says, arguing the residents of the rent-by-the-week Regis and Cambridge hotels are unfairly stereotyped. Several have lived here since Bill Clinton was in office, some since Ronald Reagan. And they don't want to move.

But the city -- for the second time in two years -- is trying to lure a developer to remake the fading single-room-occupancy (SRO) tenements at 251 and 253 S. State Street. Officials would love to see a preservation proposal, but after netting zero suitors in 2007, they are lowering the standards. Letters of intent from prospective developers are due May 5.

At the hotels, tenants are nervous. None are thrilled about the city's offer to move 60 of them to a former Holiday Inn, now called Palmer Court, eight blocks south. They worry that their downtown sanctuary will be bulldozed.

"I'm quite happy here," says Dave Sine, a 14-year Regis resident, who easily catches a bus to his veterans hospital appointments.

"There's just nothing there," he says about the newly refurbished Palmer Court, at 999 S. Main St. "A couple of bars and chuckholes."

Regis longtimer Tom McCorkle, 71, worries about not having a grocery store nearby. "I'd like to have a little store I could walk to."

Bob Glodowski, a new Cambridge resident, says not knowing his new home's fate "drives me insane." He's inclined to stay as long as possible to avoid paying storage fees for his stuff. "Moving is extremely stressful for me."

Despite having individual bathrooms and kitchenettes, the Palmer is "totally institutionalized," Sinclair sneers. "It's designed to monitor people who need monitoring. I do not need monitoring."

But Ned Chavez says he'll try the renovated rentals, which boast the same $80-a-week price tag. Diagnosed with diabetes, Chavez was unable to keep his Hertz rental-car job and lives on a fixed income. "If this place [the Regis] is going to eventually be closed down, there's nothing any of us can do."

D.J. Baxter, executive director of Salt Lake City's Redevelopment Agency, expects a decision on State Street's SROs by late summer or early fall. But he says he has no sense of whether the city will receive a realistic preservation plan or not.

At least three City Council members -- Jill Remington Love, Soren Simonsen and Luke Garrott -- want to save the buildings (which are not on the National Register of Historic Places).

That's good news for Phil Musumeci, whose family deli shares space in the ground level of the Cambridge with a children's theater and a preschool. All could be displaced along with the renters upstairs.

"They don't have the guts to say we're closing the building," Musumeci says of the city. This fall, the 68-year-old would celebrate his business's 15ths year.

"That's going to be a great anniversary," son Philip mocks. "Congratulations! Fifteen years -- you're done."

Still, Councilman Eric Jergensen, chairman of the RDA Board, says the capital's preference is to preserve the buildings and their street-level businesses -- somehow. That may mean gutting the inside for renovation while saving the facade, similar to the recently burned Stratford Hotel, reborn as Second & Second with its SROs and bike shop.

"We will continue," he says, "to push a developer toward keeping them."

Jergensen also notes the city is scouring downtown for units as SRO replacements, saying proximity to services, work and transit is key. "Ultimately, we will find places of residence for every one of these residents -- every one of them."

Matt Minkevitch, executive director of The Road Home, which oversees Palmer Court, says he too hopes to see more affordable housing.

While Palmer -- available June 3 -- is clean and newly remodeled, Minkevitch knows the historic hotels still have pull with many people. "I expect some will [move in], and I expect some will be reluctant," he says, "which is completely understandable."

Count Regis regular and maintenance man William Vogel as a certain holdout who doubts the city's motives.

"They're trying to lower the body count here, so that after [June 2], there won't be a lot of us to get rid of," he says. "I'm going to stay here at the Regis until the end. I live and work here."

djensen@sltrib.com