The Cambridge City Council last night adopted a plan to build mixed-income housing and a new playground in the Riverside area east of Peabody Terrace.

In a 6-3 vote, with three Independent councilors dissenting, the Council voted to sell the plot next to the Martin Luther King elementary school to the Riverside-Cambridgeport Community Corporation (RCCC) for a token sum. The effective donation of land will enable the community development organization to build five units of housing on the site for sale at belowmarket prices of $55,000 to $60,000 apiece, said Pablo Calderon, RCCC's executive director.

Calderon said a board of community members would choose tenants with annual incomes between $19,000 and $27,000, giving preference to area residents.

In addition, the city has received a $140,000 grant from the State Executive Office of Communities and Development to build a playground and a garden for local residents on a nearby vacant lot which is now used for parking.

Cambridge, however, received the grant on condition that the city provide for the construction of low-income housing, said City Manager Robert M. Healy. This provision links the two parts of the plan.

About 20 members of the audience from the Riverside community gave emotional testimony on the proposal. All said the area needs housing like the five proposed units because lower and middle-class people can no longer afford to remain in the area. However, some said they valued the rare vacant lot more than the housing that would replace it.

Several members of RCCC, plus councilors Saundra Graham and Alice Wolf, testified in favor of the project, while others complained that the two-part development project would further crowd a neighborhood where open space is already scarce. They called the promised playground and garden small compensation for the loss of the lot, which would be built over.

King St. resident Lawrence Atkins complained that most neighbors had only recently learned of the plan, and had not been consulted during its formation. Joan Allen, another neighbor, said she feared a decision in favor of the project would create "a dangerous precedent" by placing the need for affordable housing ahead of the need for open space.

The council vote last night gave final approval to the project.