NIAGARA FALLS — Construction resumed this week on 115 low-income public housing rental units that will be the first phase of a sweeping Niagara Falls Housing Authority plan to rebuild a North End neighborhood.

Work halted last summer on the project as officials from several agencies worked out a plan to remove a layer of ash from a city park where the new apartments will be built near Centre Avenue.

Linda Goodman, executive director of project developer Norstar Development USA, said workers began clearing brush from the site last week in anticipation of construction resuming.

Goodman said the city’s execution last month of an agreement to use $3 million of its casino revenue to pay to remove the ash and dispose of it in a landfill allowed the project to move forward again after loan documents were amended and the project received a go-ahead from the U. S. Department of Housing and Urban Development.

The entire project, expected to cost at least $72 million, calls for building 282 new housing units that are a mix of low-income rentals and homeownership sites in the North End and in LaSalle to replace the Housing Authority’s Center Court housing complex.

The plan has been awarded a $20 million federal grant under the U. S. Department of Housing and Urban Development’s HOPE VI program.

However, Goodman said plans for a later phase to add single-family houses that would be sold to residents are on hold because of tight credit markets.

“We put that on hold partly because we had to figure out the soils issue, which we have done,” Goodman said. “Now with the homeownership and mortgage market as it is, it’s very difficult to do subsidized homeownership for low income folks.”

Goodman said Norstar still intends to build the homeownership units but is currently focused on the first phase of the project.

“We want to get this neighborhood done so that homeowners will also see that things have changed out there and it will be an inviting place to own a home,” Goodman said. “In the meantime, we hope that the mortgage market will strengthen a little bit.”

Demolition of the existing Center Court apartments would begin during the second phase of the project after some residents move to the new units constructed in phase one.

The city’s Planning Board on Wednesday unanimously granted an 18-month extension for the construction of 115 rental units in the first phase of the project. Without the extension, the city’s site plan approval for the project would have run out this Saturday.

The first phase of the project will cost about $30 million, Goodman said.

The project was delayed last year as city, county and state agencies reviewed soil samples from the site and worked out a plan to remediate the ash from the park.

Officials believe the ash was dumped on the site from a municipal incinerator that operated in the neighborhood in the 1930s.

A soils management plan for the project previously called for moving the ash to city-owned land south of Centre Avenue next to a rail line. After discussions with city, county and state officials, Norstar agreed to draw up a new plan in which the ash will be taken to a landfill.

The city has agreed to use up to $3 million of its casino revenue to pay for the ash removal, in addition to $2 million it has already committed to the project.