With a deadline approaching, the developers of a proposed housing complex in Farrell are trying to satisfy the key funding source: the federal government.

But the federal Department of Housing and Urban Development's regulations have left the city's solicitor throwing his hands in the air.

Mercer County Community Action Agency and Housing and Neighborhood Development Service, Erie, want to build 10 apartments for chronically medically ill people who can live on their own.

HUD has awarded a $717,000 grant and $142,500 in rental subsidies for qualified tenants.

The agency, which formed a nonprofit affiliate, Independence Park Inc., to build the project, has an option on nine lots in the 600 block of Spearman Avenue on which to put up two apartment buildings.

Some of the property is owned by the Farrell Redevelopment Authority, and the city typically puts a series of clauses on the deed to protect the city's interests.

HUD wants the city to remove the clauses.

One clause states that the city can take back control of the land if the developer sells it before completing construction.

The clause is to prevent a developer from speculating with city-owned land, said city solicitor Stephen Mirizio.

The clause is in effect until the city has certified that construction is complete, he said. After the certification, the developer can sell the property without penalty.

HUD also wants the elimination of a clause prohibiting discrimination on the basis of race, color, creed and demographic factors.

Mirizio said HUD mandates the clause be included on all deeds.

Brad Gleason, director of planning for HANDS, said HUD wants "entire, sterile control" of the property before construction begins. Mirizio argued that it has that control with the option.

Gleason said he is looking to find out "where HUD stands" on the issue, and how important it is to completing the project.

Council added its own request of HANDS.

Acting Monday, council passed on its first reading an ordinance condemning seven of the lots in preparation for taking control of them through eminent domain.

The lots have been vacant for years and subject to tax sale. Some of the owners or heirs of the original owners are known, but some are not.

Eminent domain is a quicker method of getting control of the lots than filing a motion for quiet title, in which the court could order the titles free of claims, Mirizio said.

The problem with eminent domain is the city has to attempt to contact all owners, and the owners can file a claim on the property in an attempt to be compensated for the city taking it.

Should anyone file a claim, the city wants HANDS and the agency to agree to handle the claim, which could include paying a settlement.

Gleason said HUD would accept the developers paying the appraised value of the lots -- $50 each -- and no more. Anyone who makes a higher demand could conceivably kill the project.

Gleason asked council to remember who the project is for: the potential tenants.

"I think it's overly regulated and causes headaches," Gleason said of the project. "It's a very worthwhile project and there is a need in the community."

Ground must be broken by Nov. 30 or HUD could pull out funding.

Gleason said he is taking the lead of agency Executive Director Ron Errett and Chief Administrative Officer Gary Cervone in pushing for the project throughout a series of setbacks over its location. The Farrell site is the fourth proposed.

"There isn't time for a fifth," he said. "We really want to keep this project alive."