A long-vacant gas station on the Lower West Side of Buffalo will be replaced by a newly built Family Dollar discount merchandise store, in an area that supporters of the project say is sorely in need of retail development.

Ellicott Development, headed by developer Carl Paladino, plans to open the store by the end of the year at Niagara and Pennsylvania streets, five blocks from City Hall. The Erie County Industrial Development Agency on Monday approved nearly $300,000 in sales and property tax breaks to help offset costs of the project, which is valued at $1.25 million.

The store will open in an economically distressed area with a median income well below the poverty level and where 29 percent of households are headed by women, according to U. S. Census data cited by Karen Fiala, the ECIDA’s coordinator of tax incentive products.

“It serves some of the poorest residents within the city of Buffalo,” she said.

Fiala acknowledged the region already has a host of Family Dollar stores. But she said the proximity of this one to the neighborhood will be significant because 56 percent of households in the census tract do not have a vehicle.

“Having a merchandise store nearby I think is very important to these individuals,” she said.

Paladino said the ECIDA’s incentives are helpful for stimulating small-business projects in economically distressed areas. The store is expected to employ 10 to 15 people.

Fiala said Paladino is conducting an extensive cleanup of the former gas station site, including demolishing the facility, removing underground storage tanks and digging an 18- foot-deep hole to remove contaminated soil.

The cleanup costs have ballooned to about $250,000, including environmental reports, from the original estimate of about $100,000, Fiala said.

Al Culliton, the ECIDA’s chief operating officer, said the incentives approved by the agency’s board will help mitigate the cost of redeveloping a brownfield. He said the project reflects increased interest in “adaptive reuse,” converting dormant properties to new uses.

“It is absolutely critical for that stretch of lower Niagara Street to get redeveloped to take sites that are contaminated, many of them are, and provide an incentive to redevelop them,” Culliton said.

Also Monday, the agency approved about $639,000 in incentives to support construction of Katie’s Place Senior Housing, a $5.45 million project at 2880 Transit Road in West Seneca, north of the Aurora Expressway.

Young Development Corp. plans a two-story 50-unit apartment building for senior adults who are capable of independent living.

The ECIDA also approved Travers Collins and Co. as its new provider of marketing and public relations services, replacing Eric Mower and Associates. Eric Mower and E3 Communications were the two other firms ranked as finalists by an ECIDA selection committee.