The Concord Housing Authority could begin building a development at Parmenter Road by the fall, after receiving federal funding to help the project along.

"Now we actually have the funding, so the project's on its way," said Concord Housing Authority Executive Director John Hoyt.

The housing authority recently signed a purchase-and-sales agreement with Dover developer Mike Garrepy, which gives the housing authority an option to buy the property. It will build the same housing development that Garrepy had planned, with 25 units of affordable housing. There will be 11 two-bedroom units and 14 three-bedroom units. Apartments will be available to those making less than 60 percent of the local median income.

The project is on a small dead-end road off North State Street and was controversial throughout the lengthy city approval process. Neighbors said the project is too large for the site and cited safety concerns relating to traffic and narrow sidewalks on a newly improved road.

Once Garrepy got through the approvals process, he was willing to sell to the housing authority, which had a better chance at obtaining financing.

The authority applied for tax credits through a competitive process with the New Hampshire Housing Finance Authority. Chris Miller, director for management and development at the finance authority, said that of a dozen applicants in this round of competition, the Parmenter Road project was one of three that got money.

Typically, the finance authority would award the project tax credits, which can then be sold to investors. But because the market for these tax credits has been hurt by the credit crisis, it would be difficult to find investors, Miller said. So instead, the federal government instituted a new program where it "buys back" tax credits for 85 cents on each dollar. The Parmenter Road project will get $3.7 million in federal money from this program. The project will also get $809,000 from the federal HOME program, which provides grants to build low-income housing.

Hoyt said these grants should cover the entire cost of the project.

The federal stimulus money favored projects that could be started soon. And Concord Housing Authority's status as a nonprofit public housing authority also made it more competitive for the funds than a private developer would have been, Hoyt said.

The housing authority has already been meeting with contractors and will soon solicit bids for construction. It will employ six contractors, Hoyt said. The authority must still get final approval on the details of its plans, and the full board of the housing finance authority will review the plan at the end of August. Hoyt hopes to begin construction by mid-September, with units available for lease by the spring.

One outstanding issue is a lawsuit filed by neighbor Steve Frost regarding the city's ownership of property with a defunct railroad bed on the site where developers want to improve a road. But Hoyt said he believes that dispute is with the city, not with developers, and will not affect the project.

"It has nothing to do with the project," Hoyt said.