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The Lackawanna Housing Development Corp. todayis submitting an application for a $640,000 state grant to subsidize the proposed construction of 32 housing units in the city's 1st Ward.

The agency, a subsidiary of the Lackawanna Community Development Corp., hopes to build 14 single-family and nine two-family houses on vacant lots scattered throughout the neighborhood. If approved, the grant would provide a subsidy of $20,000 per unit.

Proposed are single-family homes costing from $65,000 to $70,000 that would sell for $45,000 to $50,000 and two-family houses costing $90,000 that would sell for $50,000.

Michael Edwards, executive director of the non-profit corporation, said "our chances are better than 50-50" of receiving the grant from the state Affordable Housing Corp.

Because the sites are in the city's Economic Development Zone, the houses would be eligible for tax abatements and owners would not have to pay full taxes until 1998-99, Edwards said. Also, because they are "in-fill" houses, as opposed to a new subdivision, the assessments should be lower, he said.

The housing corporation has purchased options on 24 lots from the city and is negotiating with Bethlehem Steel Corp. for a .6-acre parcel on the east side of Route 5.

The purchase options were approved recently by the City Council. The city will receive $250 for each lot, or a total of $6,000. Purchasing the Bethlehem property will cost nearly $10,000.

There are more lots (24 and the Bethlehem property) than proposed buildings (23) because some of the lot lines might be redrawn, Edwards said. A.W. Development Corp. of Cheektowaga is the proposed builder and M & T Bank has agreed to provide $1.1 million in financing, Edwards said.

Current 1st Ward residents who qualify would receive preference for buying the homes, Edwards said.

The program has a narrow "window" of eligibility. To qualify for the subsidy, a family of four can't have an annual income of more than $31,900. However, in order to meet the closing and mortgage obligations, the corporation feels a minimum income of $23,000 to $27,000 is necessary, Edwards said.

A city-sponsored housing development off Martin Road that used the same subsidy program had to be halted because tax increases made the homes unaffordable for people who met the income limits.

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