About a year ago, Henry R. Kravis, head of the private-equity firm Kohlberg Kravis Roberts & Co., hosted a neighborhood meeting to mobilize opposition to the Seventh Regiment Armory’s plans to transform the building into a dynamic center for visual and performing arts. At first Marc Sklar—who lives across the street at 650 Park Avenue—wasn’t going to attend. “I thought it was just a bunch of rich obstructionists,” he says. Then Sklar noticed that the events at the armory were expected to draw 1,500 people—or more. He signed on to the opposition group, Save Park Avenue’s Residential Character (SPARC), and now serves as its spokesman.

SPARC is the main irritant to the Seventh Regiment Armory Conservancy’s plan to remake the building, a crenellated fortress that is home to many of New York’s art fairs. The conservancy’s plan pits neighbor against neighbor, art lover against art lover and some fair organizers against others.

The armory, listed as one of the 100 most endangered historic sites by the World Monuments Fund in 2000, certainly needed help. The nonprofit conservancy, led by chairman Wade F. B. Thompson, a neighbor who recently donated $35 million to the renovation, and president Rebecca Robertson, a former executive director of the redevelopment arm of Lincoln Center, has won praise for its work so far. This includes steam cleaning the exterior and restoring the massive bronze doors. The group also plans to return the interiors—designed by Louis Comfort Tiffany, Stanford White and the Herter brothers, among others—to their original appearance.

In terms of future uses for the space, Robertson has forged partnerships with the Lincoln Center Festival, the Miller Theater at Columbia University, the Whitney Museum of American Art and the New York City Opera, which will stage stripped-down performances at the armory in 2009 while its own theater is being renovated. It is the specter of a steady stream of such activities that is giving fits to SPARC, whose executive committee comprises, in addition to Kravis, 60 Minutes’s Mike Wallace, industrialist Ira Rennert, and Andrew Fabricant, director of the Richard Gray Gallery. “We are worried about ‘curtain call events,” says Sklar. “They’ll change the nature of the neighborhood. Think about the traffic.”

Robertson, producing a list of neighbors who approve of the conservancy’s activities—including Jane Safer, the wife of Wallace’s colleague Morley Safer—responds that SPARC is a small group. She counts local philanthropists Susan and Elihu Rose and Janet and Arthur Ross among her donors, along with plenty of art dealers. The Art Dealers Association of America, which has staged its annual Art Show at the armory since 1988, is also a backer. “We’re delighted by the changes they’ve made,” says executive director Linda Blumberg, citing the upgraded restrooms and electrical system.

Robertson also claims that traffic has improved since the conservancy took over the building’s management from New York State in 2006, thanks to the implementation of new rules for events and loading times. She declines to disclose the number of performing-arts events she has planned, explaining that programming is still in the research and development stage, but insists, “We’re not going to do anything that has a negative impact on traffic.”

Also on the critics’ side are some fair organizers, who are upset that the conservancy has tripled rents over the past two years, to about $30,000 per day, and added or upped several fees for such extras as use of the cloakrooms and side rooms. “I think they went too far in raising rents as fast as they did,” says Sanford L. Smith, who holds seven fairs at the armory every year, including Modernism and the New York Antiquarian Book Fair.

What’s more, a few members of the art-fair world see the higher charges as the result of the deals with the Whitney, Lincoln Center and others—none of which pay rent. Robertson says that the conservancy merely raised rates to market level, like those at the city’s Javits Convention Center.