The Spokane Housing Authority, a nonprofit provider of affordable housing that also goes by the name of Northeast Washington Housing Solutions, says it has selected Walker Construction Inc., of Spokane, to be the general contractor for a $6 million-plus low-income housing project in the Hillyard neighborhood.

The project will involve redeveloping the former Martindale Apartments building, at 5313 N. Regal, to include 51 one-bedroom apartment units, says Art Noll, development director at Northeast Washington Housing Solutions. About 10 units will be reserved for homeless veterans, he says.

The construction cost will be $6 million to $6.5 million, and an additional about $5 million will be held as operating capital or capital-replacement reserves to ensure the units remain what the state considers affordable to low-income residents for at least 40 years, Noll says.

The project funding includes a $2.5 million loan from the state's housing trust fund. Most of the remaining funding will be raised through the sale of low-income-housing tax credits, which will be awarded this month, and the project also is eligible for historic-preservation tax credits, he says. Investors that buy low-income housing tax credits through a competitive bidding process can deduct the value of those credits directly from the amount of income tax they owe.

SMR Architects, of Seattle, is designing the project, he says. Construction tentatively is scheduled to start this fall and is to be completed in December 2011.

Beacon Development Group, of Seattle, is the development partner with NEWHS, Noll says.

"They are experts in renovations of historic buildings and utilization of them for housing," he says.

Beacon also worked with NEWHS on its 35-unit Pearl on Adams and 50-unit Cornerstone Courtyard affordable-housing projects, both of which opened here last year.

The Martindale Apartment building was closed in 2008, displacing 41 residents, after the building's former managers lost rent subsidies and fell behind on utility payments to the city of Spokane and Avista Corp.

The main portion of the three-story brick building, which originally served as Hillyard High School, was erected in 1912, and an annex was added in 1922. The school closed when Rogers High School opened in 1932. The building then was converted into apartments in the 1940s to house World War II veterans.

The building was listed on the National Register of Historic Places in 2005. It is the last architectural link to the Hillyard School District, which was consolidated into Spokane Public Schools when the town of Hillyard was annexed into Spokane in 1924, the City-County of Spokane Historic Preservation Office says.

The Spokane Housing Authority will start taking applications from prospective tenants next year. Rents for the planned units aren't finalized, but only people earning less than 50 percent of the Spokane-area's median income will be eligible to apply, Noll says.