An affordable-housing tour sponsored Wednesday by the Southeastern Connecticut Housing Alliance featured a rare glimpse inside the Ponemah Mills project in Norwich, where a total of 314 housing units will begin construction next month.

The historic five-story mill, dating to 1870 and standing to the side of the Shetucket River in Taftville, has been fully remediated of asbestos and lead paint, according to project manager Mark Henderson of New Jersey-based Onekey LLC, which has owned the site since 2007. All that's left to do to start the adaptive reuse of the former cotton mill is to strip out scrap iron from the building, he said, including the old sprinkler system and piping.

"There's affordable (units) on every single floor looking both ways," he said during the tour attended by about 30 people, including Groton Town Manager Mark Oefinger and Karl F. Kilduff, executive director of the Connecticut Housing Finance Authority.

Henderson estimated the first units available at Ponemah Mills will be ready for occupancy by March 2017. The units, ranging from 600 square feet up to 1,900 square feet, will all be rentals.

The project's first phase will open up 116 units of mixed-income housing, requiring the replacement of some 1,300 windows, he said. Only 41 of the initial units will be designated affordable, but plans for the overall project are to have 60 percent of the dwellings listed as affordable.

The development is being financed with $5 million in loans from the state Department of Housing and $10 million in historic tax credits, among other sources. Total cost of the project is expected to be more than $28 million, according to a report from the National Development Council, with up to $18 million being spent in the first phase, according to Henderson.

An entire build-out of the project, which is being done in four phases, should take about five years, Henderson estimated. The project is being undertaken with direction from the National Park Service, since the 300,000-square-foot building is on the National Registry of Historic Places.

"Everything here is energy efficient, but it must look 1870," Henderson said. "It has to be authentic and historic."

Henderson said the Penomah Mills project is probably the most complicated ever undertaken by Onekey. The company originally planned condominiums for the site, then scrapped those plans when the Great Recession struck and the decision was made six years ago to put the project on hold.

"In 2009, it almost happened," he said. "Now it's a better market."

Other affordable-housing projects seen on the tour were a Habitat for Humanity house in Norwich, the City Flats development in New London and the Spruce Meadows housing project in the Pawcatuck section of Stonington.

Spruce Meadows, developed by NeighborWorks/New Horizons, involves two phases totaling about $20 million in construction costs. Funding included about $5 million from the Department of Housing, and a total of 86 units are planned, with about half renting at market rates.

"We have to be able to pay the mortgage," said Julie Savin, director of real estate development for NeighborWorks/New Horizons.

Savin said the first-phase units will be one-bedroom apartments of about 700 square feet, two-bedroom dwellings of about 900 square feet and three bedrooms with 1,100 square feet. Second-phase units will be slightly bigger, she said.

"It was the friendliest process," Savin said. "It's really going to impact this community."

Terri O'Rourke, executive director of Habitat for Humanity of Eastern Connecticut, showed off a three-bedroom home at 51 Fairmount St. in Norwich that the nonprofit recently "recycled" from a previous owner who was having trouble keeping up with the mortage. Habitat is now trying to qualify a new buyer for the home, appraised at $185,000.

O'Rourke said it is unusual for Habitat to regain ownership of a home once a buyer has been found — it's happened only five times since 2007 — but the agency is constantly trying to improve the application and selection process for a clientele that makes less than 50 percent of the region's median income.

"Ownership is not right for everybody," she said, "but you give people the chance."

Habitat builds about five houses a year, and after a decade absence in the Norwich market it suddenly has found several opportunities in the city, including a vacant piece of land at Lois, Margerie and Sylvester streets that could lead to as many as seven new homes.

O'Rourke said keeping homes affordable has been made more difficult lately by stiff increases in homeowners insurance and municipal taxes. Habitat has been considering moving to a land-trust model that would have the agency retain title to the land, thereby deferring taxes, she added.

Habitat also is looking to build more ranch houses in an effort to keep insurance costs down, she said.

O'Rourke added that there's a misperception Habitat is just giving houses away when it actually has strict requirements that families provide 400 hours of sweat equity before acquiring a residence.

"It's all about empowerment," she said. "It's about them owning their destiny."

Tony Silvestri, developer of City Flats condos in New London, said for him affordable housing is all about providing homes that are easy to pay for. He has taken old multi-family rental homes in back of his New London Harbour Towers project on Bank Street and turned them into units with brand-new kitchens, bathrooms and other amenities that are now owned for about the same monthly cost.

Many of these homes were foreclosed upon or in terrible condition, he said. Silvestri added that he already has completed five building and has purchased a total of 10 or 11 properties, eyeing close to 30 in all.

"You wouldn't believe what people were paying for rent in these deplorable conditions," Silvestri said.

Silvestri said it takes only about four months to turn around a home, but then it takes an additional three months to get approval for each building from the Federal Housing Administration.

"We're trying to make money at it, and the further we get along the more profitable it will be," he said.

l.howard@theday.com

Twitter: @KingstonLeeHow