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NIAGARA FALLS – A $16 million plan to demolish 10 buildings in the Applewalk Apartments and rehabilitate the 12 remaining buildings into modern townhomes got the go-ahead from the city Planning Board on Wednesday night.

Norstar Development USA, which also owns and operates the Center Court Apartments and Cornerstone Village in the Falls, plans to take down the three-story walkups at the Ninth Street site as a part of the new Cornerstone Townhomes project.

In the end, there will be 84 units of affordable housing, where residents may have an income of up to 60 percent of the area’s median income, said Linda L. Goodman, Norstar’s executive director. There will also be a new management office, while the old management office will be converted into a maintenance office.

“This is really the last part of the northside neighborhood that has to be fixed,” Goodman said following the board’s vote.

There are currently 204 units in the Applewalk Apartments, but the housing has about a 70 percent occupancy rate, Goodman said.

That means residents from roughly 60 existing units will be displaced, though Norstar is helping residents find new places to live.

Many of the third-floor, three-bedroom apartments have been historically hard to rent there, Goodman said.

The project is located next to the 40-unit Cornerstone Village on Ninth.

Chase Bank has provided some construction financing, while First Sterling has invested $6 million through the purchase of tax credits. The state is providing $10 million in funding, Goodman said.

In other matters, the Planning Board:

• Extended the completion deadline for the construction of a new KFC restaurant at the site of a now-closed KFC at 6801 Niagara Falls Blvd.

The existing 1,800-square-foot building will be demolished to make room for a 2,800-square-foot restaurant, said Dale Moulton, director of operations for BBG North, LLC, which operates all of the Taco Bell franchises in Western New York, in addition to other franchise restaurants.

The current KFC shut down Oct. 27 and is undergoing asbestos abatement. The new restaurant is scheduled to open in March, Moulton said.

• Approved plans for an 11-room boutique hotel at 452 Third St. When completed, the property will be owned by Caravan Motel Inc.

The project will cost between $625,000 and $650,000 and is expected to be completed in six months.

Find more Niagara Falls news on the Brink blog at www.buffalonews.com/thebrink. email: abesecker@buffnews.com