LEWISTON – Developers downtown are bucking a statewide trend, starting work on an affordable housing project, according to state housing officials.

Developers, financiers and city and state officials were on hand Wednesday to officially dedicate the Birch Hill Senior Housing construction project, a 20-unit apartment complex on the southwestern corner of Birch and Bates streets. Work is scheduled to wrap up on the project early in 2010.

“It’s a rare event; because of the economic condition in our country, the affordable housing industry has been deeply affected,” said Dan Brennan, director of development for the Maine State Housing Authority. “Those investors who are willing to purchase affordable housing tax credits have sharply declined in the last few years and the investment pools have all dried up.”

The project will include 17 one-bedroom and three two-bedroom apartments. Five units will be fully handicapped accessible. It will replace three vacant lots running along the southern side of Birch Street between Bates and Knox streets. The area was home to five apartment buildings that burned in 1993 and were torn down.

The project is budgeted to cost $4.48 million. It’s being financed with low-income housing credits managed for MaineHousing by Northeast Bank and the Northern New England Housing Investment Fund. The two are providing $3.74 million in equity in exchange for the tax credits. Coastal Enterprises is setting aside another $3.02 million in financing.

MaineHousing is providing another $400,000 in loans and the city has set aside $350,000 in HOME funds for additional loans. The city has also created a tax increment finance district to help lower rents for the units.

Brennan said it was unique in Maine to find banks, government and developers working so closely in the current economic client.

“What should be my fourth groundbreaking this year is my first,” he said. “Three other affordable housing projects in our state, and the jobs associated with those projects, are just sitting and waiting for funding before they can start their construction.”

The buildings are designed for people 55 years old and older with incomes below 60 percent of the area median income – $30,140 for a family of two, according to the U.S. Census bureau.

When it’s completed, single-bedroom units will rent for $435 and two-bedroom units will rent for $550 per month, including heat and hot water.