Farrell council has cleared what had been a tall hurdle for the redevelopment of the Steel City Terrace public housing complex.

But the highest hurdle is yet to be jumped.

The initial phase calls for the leveling of the 100 public housing apartments and replacing them with 53 rental units, some of which will be for public housing, and others which will be rented at closer to the market rate.

Ultimately, Mercer County Housing Authority and its development partner, Falbo/PennRose Joint Partnership, Pittsburgh, plan to build 74 public housing units, 45 apartments rented at closer to the market rate and 26 homes for sale.

Some of the work will be done in the surrounding neighborhood.

Council approved a subdivision and the development plan for Steel City Monday.

Council created a new zoning category -- traditional neighborhood development -- to pave the way for the project.

A series of reviews by city boards and the Mercer County Regional Planning Commission made the designation a long, bureaucratic path, but it relieved the developers from having to seek variances in three separate zones.

At the city level, the next step for the project is a building permit.

But the developers are not ready to ask for one. The project still needs the approval of the federal Department of Housing and Urban Development, which is providing $9 million of the estimated $30 million total project cost through a HOPE VI grant.

A tentative closing date has been set for July 7 between the authority, Falbo/PennRose and HUD. The closing would settle all phases of the project and budget, but a few major documents have not been agreed upon in preparation for the closing.

The authority has not settled on a developer agreement with Falbo/PennRose, said authority Executive Director L. DeWitt Boosel. The principles of the agreement have been worked out, but HUD made some comments on the proposal that needed to be addressed, he said.

Those comments have been incorporated into the plan and it will be resubmitted to HUD.

"The comments were very general," Boosel said. "I don't anticipate any problems."

Two other documents will require more effort. Developers need to complete a regulatory and operating agreement that governs the entire project, and a plan for managing the apartments once they are built.

PennRose Management Co., Kingston, Pa., will manage the rental units.

Boosel said the authority hopes all the documents can by completed in time.

"We're pushing for that July 7 closing," he said.

He added that developers have to complete the first phase of construction by December 2003 under guidelines set by the Pennsylvania Housing Finance Agency, which provided the bulk of the $9 million first-phase budget by providing tax credits that were bought by National City Bank.

Sereday Excavating, Masury, has begun demolishing the first Steel City apartments in preparation for construction.

"That was a big milestone for us," Boosel said.

You can e-mail Herald Staff Writer Joe Pinchot at:

jpinchot@sharon-herald.com