The city's former Fire Station No. 45 is in the foreground on Franklin Street with the Church of Scientology's Flag building to the west. The City Council on Dec. 2 voted to advance an affordable housing project on the site.

CLEARWATER — An 81-unit affordable housing project is one step closer to getting built downtown.

The Clearwater City Council voted 4-1 on Dec. 2 to allocate $1.8 million of its pot of state and federal housing dollars to Blue Sky Communities in a project aimed at turning a former fire station on Franklin Street into affordable apartments. Mayor Frank Hibbard voted no.

The city had entered an agreement with the developer in 2019 and dedicated $610,000 toward the project. But it took two years for Blue Sky to secure $17.5 million in state tax credits.

Then, soaring construction prices during the coronavirus pandemic caused costs to jump $4.6 million to $28.5 million, prompting Blue Sky chief executive Shawn Wilson to ask local government to help fill the gap.

The city’s $1.8 million portion will be a loan paid back over 20 years. Blue Sky will now request $2 million from Pinellas County’s Penny for Pinellas affordable housing program.

As of this summer, the county has dedicated $23.4 million to eight projects from an $80 million fund dedicated to building affordable housing through 2030.

Carol Stricklin, director of the Pinellas County Housing and Community Development Department, said the Blue Sky project is likely to score well in its staffing recommendation to the Board of County Commissioners because it has local support, state funding, is located in a downtown community redevelopment agency and all 81 units are affordable.

The units would go to residents with incomes between 30 percent and 80 percent of the area median, or up to $59,050 for a family of four.

Before voting to approve the city’s additional funding, council member Hoyt Hamilton noted the need for more affordable housing, especially to serve those working in the hospitality and service industry, one of Clearwater’s largest sectors.

“Affordable housing is a very important element of every community,” Hamilton said.

Yet Hibbard warned that he believed the council was making a mistake it would later regret.

The city is still finalizing plans for where to build a new City Hall. And with the Franklin Street site located near the city’s Municipal Services Building, garage and police station, it could be a piece of the puzzle needed for a government campus, Hibbard said.

The Church of Scientology has also had a long-standing interest in the site. Hibbard has previously said the Franklin Street parcel could be a bargaining chip to trade for more important and prominent church-owned properties.

The former fire station is surrounded by Scientology interests on two sides. To the west is the church’s seven-story, 300,000-square-foot Flag Building. To the south, Scientology owns a vacant lot where it plans to build a 3,600-seat auditorium.

“I’m for finding more affordable housing units,” Hibbard said. “I just think we can find them elsewhere in the downtown and use this money in a better way.”