BRATTLEBORO -- Ever since Tropical Storm Irene forced the residents at Melrose Terrace to evacuate, Brattleboro Housing Authority Executive Director Chris Hart has been trying to figure out what to do with the aging public housing project.

During the cleanup process, when about 26 residents were not able to return to their homes due to storm damage, the federal government made it clear that eventually Melrose Terrace would have to close. Melrose Terrace is in the floodway and FEMA and U.S. Housing and Urban Development officials said new federal rules prohibit the government from investing in projects that are likely to sustain significant damage during a flood.

On Tuesday, Hart announced to the Melrose residents that a location has been found to partially replace the 48-year-old public housing project. BHA is working with Housing Vermont, and the two organizations have secured an option to purchase a 2.8-acre site at 464 Canal St. near Walgreen's.

The groups want to build a 55-unit, three-story apartment building to help partially replace the 80 units at Melrose. The project is estimated to cost $13 million. The new affordable housing development, which will be known as Red Clover Commons, will be built on land which was the first choice of Melrose tenants and BHA officials who have been looking at potential sites around Brattleboro for more than a year.

"This is a site that is near the hospital, three pharmacies and stores and restaurants, and it is also close to residential development. It was our first choice and this is a great big step we are taking. We're very happy" said Hart. "I think we have significant momentum going. We have a long way to go, but it is moving forward."

Hart said the rules for investing money in housing projects such as Melrose are so strict that she is not even allowed to paint the buildings.

Over the past year a committee has been performing site visits, feasibility studies and financial requests to put the project together.

"The federal government says this is something we have to do," Hart said.

Housing Vermont is a non-profit development company that works with local organizations, public agencies and the private sector to create permanent affordable housing around the state. The group has helped build more than 4,800 affordable apartments in 155 developments since it was founded in 1988. Housing Vermont will be purchasing the property on Canal Street.

Hart says it was necessary to partner with the group to get access to different funding sources, and while it was crucial to moving the project forward it has made the project a little more complicated.

Since Housing Vermont will own the land, Red Clover Commons will not be a public housing project, but will instead be built as affordable housing.

Hart said BHA will do whatever it takes to ensure that the Melrose residents do not see a rate increase, but their housing support will be different than what they are receiving at Melrose.

The Vermont Department of Housing and Community Development has been awarded disaster recovery funding due to damage caused by Tropical Storm Irene and the group is requesting a $5 million allocation for BHA. If that money is approved Hart said it will be used to purchase the land on Canal Street. She says local permitting could begin in November.

"Getting that money will be very significant," Hart said. "It will really push this whole thing forward."

But at the same time, Hart said, there is still a long way to go before the first tenant moves in. All of the funding is not yet in place, there are environmental tests to complete, designs to approve and a series of permits that need to be acquired. Hart said the Melrose residents will help with the design and she said there will be community hearings as well as the project advances.

If everything falls into place construction could begin in the fall of 2014 and open the following year.

The group also needs to develop another 25 apartments, and new offices, to completely replace the facilities at Melrose Terrace. That will require a whole new round of permitting, applications and funding. Still, Hart said securing the site on Canal Street was a huge step for the project.

"This is very exciting," Hart said. "After the storm the board of commissioners said they wanted to find a place that was safe for this population. It is great to be at a place where we are saying that we, as a staff are doing something that the board has committed us to do for our residents."

Howard Weiss-Tisman can be reached at 802-254-2311 ext. 279 or hwtisman@reformer.com. Follow Howard @HowardReformer.