Controversy surrounding the use of a burnt-out building in the Edgewood neighborhood has begun to settle down, and construction of a new complex to house the elderly is slated to begin during the summer of 2006.

The Whalley Building, located at 566 Whalley Ave. northwest of Ella T. Grasso Boulevard, was purchased last month by Housing Operations Management Enterprises Inc., a nonprofit organization devoted to developing affordable housing. HOME Inc. plans to demolish the building, which was gutted in an electrical fire four years ago, and build a residential community for the elderly and homeless with street-level retail.

The project had been delayed pending approval from the New Haven Board of Zoning Appeals, and left some neighborhood residents troubled over the project’s size and about bringing homeless persons into the area, Ward 24 Alderwoman Elizabeth McCormack said.

But the plans were scaled down, cutting the project from four stories to three, in order to address some of the neighbors’ concerns and fit current zoning restrictions, rendering zoning approval unnecessary. Although McCormack said some residents remain uneasy with the project, some locals said they are looking forward to productive use of the space.

Scheduled to be built after the existing building is demolished in May or June of next year, the three-story Whalley Terrace development will include 22 units, more than one-third of which will be specially designed to accommodate the disabled, HOME Inc. representative Chris Peterson said. The building is designed to function as a community over commercial street-level space, he said, including support-services staff alongside retail occupants.

“Community rooms will enable tenants to interact and socialize,” Peterson said. “Controlled access and on-site staffing will be provided to ensure security.”

McCormack said concerned neighborhood residents have no potential recourse now unless the plans come up before the zoning board again. She said she considers this to be unlikely, since the plans meet the current zoning requirements for the area. In the event that HOME Inc. changes the plans, once again making them subject to approval, McCormack said she will continue to inform her neighbors of potentially problematic aspects of the proposal by circulating information throughout the area.

Peterson said that both HOME Inc. and Columbus House have engaged in dialogue with the community in planning Whalley Terrace. He said many of the residents who were dissatisfied with initial proposals now agree with the plans.

“The design is … in keeping with the community’s goals and the general nature and character of the neighborhood,” Peterson said.

At a previous public hearing on the development, a local woman stood up and said she would rather look at the burned-out building than at a facility for the homeless, McCormack said. Some locals still have such concerns, McCormack said, although she said she is grateful that HOME Inc. scaled down the plans.

“Are we jumping up and down for joy? No,” she said. “But if they are good neighbors, we will be happy.”

But Reggie Blake, who owns Ray Jean’s Hair Care Studio, located across the street from the building, said he was happy to see the site being put to use. He said he thought keeping the building empty was not making efficient use of the space and that taking care of the homeless and elderly would be beneficial.

The development of Whalley Terrace is being executed under the State of Connecticut Supportive Housing Pilots Initiative, a collaborative program that creates affordable housing and support services for populations at risk for homelessness.