A housing project to rehabilitate Weatherly’s grande dame, the Mrs. C.M. Schwab School, is back on track as borough council approved an extension on a 45-year lease option with an Allentown-based nonprofit.

Last month, council tabled the lease extension, which gives the Alliance for Building Communities an option to extend the lease an additional 30 years beyond the original 45-year term, pending more information.

On Monday, Brad Fatzinger, ABC’s executive director, updated council on the more than $11 million project first announced in July 2024, clearing the way for council to approve the lease extension.

The project, which will develop the building into 12 two-bedroom and 18 one-bedroom apartments, stalled when construction costs came in $3 to $4 million higher than expected, he said.

ABC has been working to come up with the additional funding to move the project forward, Fatzinger said.

“We do have that funding lined up, so that’s taken care of,” he told council. “The other issue was an equity investor.”

An equity investor puts equity into the project in return for the low-income housing tax credits that the project had been awarded, Fatzinger explained.

“That equity accounts for about 75% of the money that’s going to be needed to construct and rehab the properties,” he said.

A previous investor ran into issues with the tax credits and other investors weren’t interested in funding projects in Carbon County, Fatzinger said.

“It turned out that we went through a lot of investors, trying to bet them to come in on the project,” he said. “Carbon County seemed to be somewhere that they didn’t want to be for whatever reason.”

ABC has now secured an equity investor and the funding for the project, Fatzinger said.

“We’re kind of at the finish line with this,” he said. “This request for the lease extension stems from that investor.”

The 45-year lease option was in place, but the investor’s attorney wanted the 30-year lease option extension to conform with tax law regarding the “useful life of the asset,” which is considered 75 years by the IRS, Fatzinger said.

The lease option extension allows the investor to show that the tax credit partnership has “the benefits and burdens of ownership” for that period, he said.

“Without it, it seems that they will not invest in the property, which you know for all the work that we’ve done to get to this point, really jeopardizes it,” Fatzinger explained.

Mayor Michael Bellizia asked for a motion to approve the extension, and Councilman Jeffery Miller made that motion.

“We’re too far in,” Miller said. “If not, we’re going to get nothing out of it, and they’re investing their money, so I feel we should.”

Councilman Joseph Cyburt seconded the motion.

Before the vote, former Mayor Paul J. Hadzick, who had been called out by Cyburt for coming to meetings and being disruptive, interjected and asked for clarification on the 75-year term.

Hadzick, who was allowed to continue, said that he had suggested a lease agreement when the Weatherly Area School District voted down a 10-year tax abatement under the Local Economic Revitalization Tax Assistance Program, or LERTA.

Hadzick said the reasoning was that a 10-year lease would give the nonprofit the same tax break, because the borough would still own the building and is not taxable. He did not favor the longer terms of 45 and 75, he said.

Council voted unanimously to approve the lease extension to move forward the project which will maintain, restore and preserve the historic building which was donated by steel magnate Charles Schwab in honor of his wife, Eurana Dinkey, who hailed from the borough.

Construction on the building which dominates the town’s skyline began 125 years ago this month and the school opened two years later in September 1903.

The building has sat dormant since ceasing to operate as a school in the early 1990s.

The borough has also received $750,000 in grant funding to raze the adjacent annex building as part of the project. The borough initially secured $250,000 to tear down the annex, but asbestos issues significantly increased the cost.

The borough applied for stat Local Share Account funding, or a gaming grant for the additional $500,000, which was awarded earlier this month.

The borough is currently putting together bidding specifications for the demolition, Tracy Grover, borough manager, said.