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In a move that caps nearly a decade of acrimony and controversy in Lancaster, town officials have reached an agreement to sell an industrial building to a manufacturer that plans to move there from leased space in North Tonawanda.

The town is selling the 74,000-square-foot former Colecraft Manufacturing building, which it purchased for $1.6 million in 2003, to Erie Engineered Products for $1.4 million in a deal set to close next October.

The closing is delayed until the town can move out some offices and stored equipment, and until Erie can leave its current location.

“We’re bringing a manufacturer to Lancaster, and we’re putting that property back on the tax rolls,” said Supervisor Dino J. Fudoli, a critic of the town purchase of the building who took office in January.

The town bought the building, at 3949 Walden Ave., for conversion to a new law enforcement complex.

But the structure languished underused for years, until the Town Board decided in 2011 to build a new police and courts building and, earlier this year, to sell the Cole-craft facility.

Erie Engineered Products, a manufacturer of shipping and storage containers used in the defense industry, would bring its 55 current employees to the new location but not expand its workforce. “The configuration lends itself to better usage,” said Ronald W. Korczynski, company vice president.

The purchase would represent new life for an industrial building that has mostly sat vacant since Colecraft shut down its operations there in early 2003.

Critics blasted the town’s purchase almost from the beginning, arguing the structure was ill-suited for renovation into a Police Headquarters and Town Court.

After years of delay, marked by a residents’ lawsuit over how the purchase was conducted and rising cost estimates for renovation, the Town Board abandoned the project and voted to construct a new police and courts building on Pavement Road.

Elected officials involved in the Colecraft purchase continue to defend it as the right decision at the time, but the State Comptroller’s Office in October issued an audit that deemed the purchase largely a waste of taxpayer money. The audit concluded that the town spent $2.5 million on the Colecraft project, including about $500,000 in interest bond payments, and found that the town, county and Lancaster Central School District had forgone $440,000 in property taxes since 2003.

“We were looking out for the taxpayers,” said Dan Beutler, a Depew resident who joined the citizen lawsuit.

The town has housed its Detective Bureau in the Cole-craft building and used the facility for storage, and its expenses also include the cost of providing utilities, maintenance and insurance.

Town officials have sought to sell the 8-acre property since the spring, and hired Pyramid Brokerage in August to market the site.

However, Pyramid agreed it would not be paid anything if the town ends up selling the Colecraft property to a company that approached the town prior to its hiring of Pyramid, and this contract provision applies to the sale to Erie Engineered Products, Fudoli said.

Erie leases space in the Wurlitzer Building, 908 Niagara Falls Blvd., North Tonawanda, but was not assured that it could renew its lease when it ends in February 2014, Korczynski said.

So the manufacturer looked for new space in Niagara County or northern Erie County. The company will end up with slightly less space than it now has but should be able to use the Colecraft building more efficiently, Korczynski said.

Representatives from Erie and the town signed the contract Friday afternoon following lengthy negotiations.

“Even in a commercial market that isn’t that great, we got a good number for the building,” said Councilman Mark S. Aquino, who joined the Town Board in 2010.

The sale won’t close until October because the town needs time to find other storage space for the equipment and vehicles in the Colecraft building, and the Detective Bureau can’t be moved out until the new police headquarters is completed next fall.

The town may have to build a pole barn at the Highway Department to house department equipment now stored in the Colecraft building, said Councilwoman Donna G. Stempniak, and officials don’t want to have to move the detectives twice.

Erie wanted more time because its lease isn’t up until early 2014 and the company needs to prepare for its move.

The company late next year will begin making needed upgrades to the Colecraft building and to move in its manufacturing equipment, Korczynski said.

Fudoli said that the company may request an exemption on its mortgage recording tax from the Lancaster Industrial Development Agency but that Erie won’t seek a payment-in-lieu-of-taxes agreement. The Town Board still must sign off on the sale, Town Attorney John Dudziak said.

email: swatson@buffnews.com