While the construction of new housing has begun on what was Steel City Terrace in Farrell, city council is threatening to issue a stop-work order over the construction of a new sanitary sewer system.

The city did not issue a permit to build the sewer system because developers did not take out a performance bond that would allow the city to complete construction should the contractor fail to finish it, said code inspection officer Mark Yerskey.

While representatives of both sides thought an agreement was in place for contractor Rien Construction of Brookfield to take out the bond, city solicitor Steven Mirizio said he has received no notice that it happened.

"We're going to put a stop order on the work," Councilwoman Helen Marenchin said Monday.

Frank Gargiulo, HOPE VI coordinator for Mercer County Housing Authority, said he thought the issue was resolved a week ago.

"We'll make sure that happens," he said of the bond.

Gargiulo added that no work has been done on the sewer system.

After completion of the sewer line, the city would take over ownership and maintain it.

Gargiulo said the issue must be resolved so the sewer system can be installed before bad weather hits.

The city issued a building permit and construction of the buildings is progressing.

The first phase of the project is to demolish the existing Steel City public housing apartment buildings and build 53 apartments.

By the end of the multi-phase project, the authority and developer Ralph A. Falbo Inc., Pittsburgh, plan to build 74 public housing units, 45 apartments for rent at closer to the market rate and 26 homes for sale.

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

In a related matter, council Monday adopted on its second reading an ordinance condemning two lots in order to use its power of eminent domain to create new deeds for them.

Community Homebuyers Inc., the authority's nonprofit affiliate, bought the lots at tax sale, but no deeds could be found for them.