New London — The city is partnering with a local nonprofit affordable housing organization to help rehabilitate and purchase nine or more two-family homes in a program being pitched as the successor to the City Flats initiative.

Bolstered by a $1.3 million state Department of Housing grant, the city plans to join with New London-based Eastern Connecticut Housing Opportunities Inc. to purchase, rehabilitate and resell the homes as owner-occupied rental properties in a new program called the Hempstead District Homeowners Program.

It is in contrast to the City Flats program, which rehabbed old homes into condo units.

ECHO, as it has been doing on other projects throughout the city, will buy and rehabilitate deteriorating housing stock and provide affordable homes to first-time homebuyers with built-in rental income.

Each of the units will be sold at market rate with the city using $298,000 set aside from the state grant for down payment assistance. Deed restrictions will limit the cost of rental units, which will be reserved for a household earning below 60 percent of the area median income, said Judi Cox, a loan specialist in the city's Office of Development and Planning.

The city is acting as the financial administrator for the state funds, while ECHO will purchase the homes and has the expertise to seek the appropriate state historic tax credits to help rehab the homes, she said.

The state funds will initially cover the costs of purchasing four homes from the Tagliatela family, doing business locally as New London County Real Estate.

The Tagliatelas funded the development of New London Harbour Towers and the City Flats initiative. City Flats, the brainchild of Tony Silvestri, was focused on the rehab of the homes in the neighborhood surrounding Harbour Towers. Properties were purchased and state historic tax credits were used to rehabilitate the multi-family homes. More than two dozen individual units were sold as condominiums as part of the program.

The Tagliatelas have since divested from Harbor Towers and City Flats and in 2018 the Tagliatela family donated its remaining unsold condominium units at Harbour Towers to the University of New Haven.

Steve Lopes, the chief financial officer for the Tagliatelas' Franklin Construction Company, said the Tagliatelas have agreed to sell some of the remaining properties purchased as part of City Flats.

“The city expressed a desire that City Flats would continue because it has had such a positive impact on that neighborhood,” Lopes said. “New London County realty has agreed it would transfer those properties being prepared for renovations to the city at considerably below the cost already invested.”

The city will pay $50,000 for each of the four homes owned by New London County Real Estate at 38 Wausau Place, 24 Home St., 70 Coit St. and 103 Truman St. ECHO will identify more homes for purchase for the project at a later date.

Instead of renovating run-down homes and commercial buildings and selling the individual units as condos, ECHO plans to continue its mission of rehabilitating and selling homes at an affordable price.

The new program is being modeled after ECHO’s Home New London Program. ECHO was awarded $2.6 million from the state Department of Housing in 2017 to renovate at least 22 single-family homes for families with limited income looking to move on from rental properties.

Felix Reyes, the director of the city’s Office of Development and Planning, said in addition to providing a boost to people looking to make the jump from a rental to home ownership and introducing more affordable rental options, the program “is helping to build up the community.”

State Rep. Anthony Nolan announced the news of the grant following approval by the state bond commission on Wednesday.

g.smith@theday.com