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It might not seem like the ideal time to begin building a house.

But a little snowfall last week didn’t prevent a backhoe from digging out a new basement in Lackawanna and ending more than two years of inactivity at a 21-lot subdivision that has produced a single home in six years after the city spent more than $800,000 getting the area ready.

A buyer purchased the lot and hired Sunset Custom Homes to build a new home.

Sunset also dug a basement on another lot last week for a model home, per an agreement with the city that allows Sunset Realty of Western New York, a sister company of Sunset Custom Homes, to serve as exclusive listing agent for all of the lots in the development.

“We’ve got a model started and we’ve got one sold,” said F. Thomas Pecora, consulting agent and manager with Sunset.

It could be the start of a homebuilding spree in the Steel City.

A Cleveland company also is expected to begin construction in April on 48 single-family homes in the city’s 1st Ward.

The subdivision near Martin Road Elementary School, which was envisioned by city leaders as a way to add upscale homes in Lackawanna and boost the city’s tax base, has been a major disappointment.

The city in 2008 spent upward of $830,000 on street paving and storm sewers. A single home was built, in 2011, and a tiny fraction of the city’s investment has been recouped.

To jump-start more interest, the city slashed the price of the lots in January. Last month, the City Council agreed to reduce minimum home sizes to 1,500 square feet, allowing for more modestly-priced homes to be built.

The original covenants on the lots had required ranches of at least 1,800 square feet or two-story homes of at least 2,400 square feet.

Pecora said Sunset can build a complete 1,500-square-foot home for about $170,000.

The model house will be 1,800 square feet and have three bedrooms, 2.5 bathrooms and an attached garage. It will sell for $195,000.

Another developer, Burke Homes, proposed building smaller homes in 2011 in exchange for being named the preferred builder, but city officials did not pursue that route.

Sunset was the only company that approached the city more recently with a plan to market the lots.

“We’ve built in subdivisions, we’ve built on odd lots, but this is the first time we’ve taken over anything from a municipality,” said Pecora.

Pecora said he was optimistic lot sales would pick up once the model home is built.

Already, he said, “we’ve had interest from Realtors. We’ve had people call.”

The foundation for the model home could be poured as early as this week, with framing to begin after that, and the house taking shape within a month or so.

First-time home buyers may be eligible for a state program that reduces assessments by as much as 50 percent for the first 10 years of homeownership, said Pecora.

All of the houses in the 1st Ward “Lackawanna Homes” project, which is being developed by NRP Group, will be significantly subsidized.

The houses will be leased to income-qualified residents for 15 years. Residents will then be able to buy the houses outright at discounted prices.

The $12 million project, sponsored by Lackawanna Housing Development Corp., is being funded largely through tax credits by the state Office of Homes and Community Renewal. It also will include a new community center for the 1st Ward.

Families earning between 30 percent and 60 percent of the Area Median Income will be eligible for the homes, and net rents will range from $310 to $725 per month. Potential homeowners also will be required to participate in homeowner training, including credit counseling, financial planning, budgeting and home maintenance and repair.

email: jtokasz@buffnews.com