Mercer County Housing Authority made a May 1 deadline to reapply for state tax credits for the redevelopment of Steel City Terrace in Farrell.

The authority and developer Ralph Falbo Inc., Pittsburgh, are seeking $599,686 in tax credits from the Pennsylvania Housing Finance Agency, said Frank Gargiulo, the authority’s HOPE VI coordinator.

The authority has received a $9 million federal HOPE VI grant to demolish Steel City and build new public housing and market-rate rental apartments, and new homes for sale.

The tax credits would be sold to investors in return for credits on their federal income taxes. Developers believe the credits could raise $4.8 million for demolition and construction.

Paula Brightbill, public information officer for the housing finance agency, said $8.8 million in tax credits are available statewide. The state is broken into regions with each region granted a certain amount of that total, but the money for the regions has not been divvied up yet, she said.

In a previous application, the authority sought $596,145 in tax credits, a majority of the $652,000 available for region six, which includes Mercer County.

The finance agency is unlikely to announce decisions on the applications until September, Ms. Brightbill said.

The authority’s previous application was turned down because the finance agency was not satisfied with a marketing study showing the need for new housing units, officials said.

Falbo submitted a new study that goes into more detail and is less site-specific, Gargiulo said.

The tax credits would fund the bulk of the $9 million first phase of demolition and construction, with the rest coming from a portion of the HOPE VI grant and about $1.5 million in the authority’s annual modernization grant from the federal government.

The authority also has applied for two much smaller federal grants for phase one.

The Federal Home Loan Bank is being asked for both grants: $265,000 for construction of public housing and market-rate rentals, and $157,768 to pay for the difference between the construction cost of the new for-sale homes and their sale prices, Gargiulo said.

The authority wants the homes to be sold affordably to attract lower income buyers, he said.