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Standing just east of Michigan Avenue near the former Sheehan Memorial Hospital, the Ellicott Town Center has four remodeled mid-rise apartment buildings, numerous neatly kept senior garden homes and owner-occupied townhouses.

Two decades ago, an abandoned eight-tower, crime-ridden housing project dominated the neighborhood.

Today the First Shiloh Housing Corp. owns the housing development following a hard-fought $40 million conversion.

“They were in bad shape,” said Grace Tate, president of the housing corporation. “The whole area was desolate. It was a high crime area; it was not suitable for families.”

The transformation of the 14-acre project and its new ownership will be celebrated Saturday with a block party for residents and well-wishers from 11 a.m. to 4 p.m. on Eagle Street, between Michigan Avenue and Pine Street.

The turnaround included the eventual transfer of ownership to the housing corporation, a path taken by low-income housing projects across the region and the nation. The low-income housing tax credit, a federal program to entice investors to pour private equity into affordable housing by offering them tax credits to reduce their tax liability, is the driving force. An investor, like a bank, will enter a partnership with a developer and a nonprofit entity on an affordable housing project. When the tax credits expire, the property is transferred to the nonprofit organization.

“We’ve partnered with different organizations, like the BMHA (Buffalo Municipal Housing Authority),” said Linda Goodman, vice president of Norstar Development. “And once that time is up, the investors and the developer walk away, and the nonprofit owns the development. This typically is how low-income housing gets developed. No one is really making money, but private equity goes into a low-income housing project in the City of Buffalo, and that’s a good thing.”

That was the case with the Ellicott Town Center. Key Bank and Ocwen Financial were the investors and the majority owners of the development. Norstar was the developer, First Shiloh Housing Corp. managed the property, and they both received developers’ fees.

Ellicott Town Center is on the site of the former Ellicott Mall public housing project, which was built in 1958. It was run by the BMHA and consisted of eight residential towers with a total of 590 apartments. By the mid-1960s, it had begun to deteriorate and was closed in 1981. In the early ’90s, the city prepared plans to redevelop the area. It tapped Norstar, which specializes in affordable housing development, as the developer. In 1991, BMHA transferred the 14 acres to Norstar.

First Shiloh Baptist, located on Pine Street near the development, was approached by city officials in 1992 to get involved in the massive renovation of the dilapidated complex.

“It was an eyesore; it was the first thing we saw when we came out of church,” said Cravane M. Givens, a member of First Shiloh Baptist Church and a founding member of the housing corporation. “At that time new homes were being built, and they didn’t look good next to the housing project.”

In 1994, the church formed the not-for-profit housing subsidiary and joined a partnership that included Norstar and the financial institutions, called the Ellicott Mall Partnership, charged with the redevelopment project. The goal was to create a mix of housing with 281 apartments, 48 private town homes and 24 senior citizens’ garden apartments, and also promote a mix of low-, moderate- and middle-income families.

Norstar received the tax credits for the project, which it sold to Key Bank and Ocwen Financial. The money from the sale of the tax credits went toward paying for the project. Norstar, as it does with its other projects, also pinned down other funding sources, including the New York State Housing Trust Fund Corporation, Department of Housing and Urban Development HOME funds, and Buffalo Community Development building grants.

The renovations, done in four phases, began in 1994 and were completed in 1997.

It involved the demolition of four of the eight towers, the gutting of the remaining towers and the construction of one-, two- and four-bedroom apartments. It also included the construction of the town homes, senior citizens apartments and a senior citizens center. “It was a very successful project,” she said. “We haven’t had any vacancy issues.”

The senior citizens homes are at 100 percent occupancy, and the apartments are at 98 percent, Tate said.

Jim Dentinger, president of McGuire Development, which is doing a $20 million conversion of the former Sheehan Memorial Hospital into an office building that houses Time Warner’s new service center, said the housing corporation’s ownership is “natural progression” that will continue to spur more development activity in the area. The remodeled building will also have McGuire Group’s training facility, and University Pediatric Dentistry will remain there.

The project is seen as broadening the downtown office core and potentially serving the Buffalo Niagara Medical Campus.

From the onset of the Ellicott Mall housing project, the housing corporation managed the day-to-day operations of the development, along with maintenance and rent collection.

“We were the stewards of the development; we were responsible for running it,” Tate said. The tax credits expired after 10 years, but investors had to stay on for another five years as owners. The 15-year obligation expired in 2012, and the housing corporation became owners of the development last December.

When the mandatory compliance period expires, owners usually look for exit strategies from the investment because low-income housing has rent limits, which are locked in for 30 years after the project is completed. Often revenues are not enough to cover taxes for the property. As the nonprofit developer of below market-rate housing, the housing corporation has been granted a property tax exemption.

The Rev. Jonathan R. Staples said the housing corporation’s acquisition of the development does not mark a conclusion.

“I don’t see it as an end,” he said. “I see it as an opportunity to continue serving our community and being active shareholders and stakeholders in our community.”

email: esapong@buffnews.com