Additional funding will come from the Claremont Development Authority with cash and borrowing, Merrill said. The authority will meet next month to begin discussing those details, she said.

Merrill told the development authority board Thursday she has spoken to the Upper Valley Lake Sunapee Regional Planning Commission and has made a request for funding for an environmental review of the Farwell Block. The commission paid for a similar assessment at 56 Opera House Square in the spring using a portion of a federal brownfields assessment grant. Credere Associates of Westbrook, Maine, did the assessment and estimated it would cost $40,000 to remediate asbestos and some other contaminants in the building. Merrill said she has applied to the Capital Regional Development Council in Concord for the remediation expense.

The three-story stone building was constructed around 1900 and in its early years was home to the Claremont Saving Bank.

The Goddard Block grant was applied for through the county and is one piece of project funding needed to completely rehabilitate the property and construct 36 studio and one- and two-bedroom apartments. New England Family Housing of New Hampton, N.H., which owns and manages several apartment building in the city, including the former Latchis Theater, also on Pleasant Street, has a purchase and sales agreement on the property.

“It is great news but obviously just one piece of the funding,” Kevin Lacasse, CEO of New England Family Housing, said last week. “The next big piece is the low-income tax credits. That is a major funding source.”

Lacasse said they filed the application with the New Hampshire Housing Finance Authority in November and are expecting an answer in late January.

“We are feeling pretty good and are hopeful,” Lacasse said. “We have to self-assess on the application based on certain criteria and we scored very high.”

Tax credits and private money would complete financing of the estimated $5 million to $6 million needed to completely rebuild the Goddard Block interior at 54-62 Pleasant St.

In September, the Planning Board approved a site plan for the property, contingent upon the required parking — one space per unit — being secured. Nineteen spaces have been identified, leaving 17 required.

New England Family Housing would increase the number of apartments from 24 to 36, with six on the ground floor at the back of the building. At least nine of the apartments would be two-bedroom. Other improvements include landscaping and repairs to the facade on Pleasant Street.

The building has been vacant since earlier this year when the city condemned it because of numerous code violations and forced the tenants to move.

White River Junction architect Jay Barrett told the Planning Board the brick building from the early 20th century is structurally strong but the mechanical, plumbing and electrical systems need to be replaced and a sprinkler system installed. “It will be a complete gut job,” Barrett said.

Lacasse said last week they will be finalizing the architectural drawings and bid specifications and he remains confident the 10-month construction period can begin in the spring.

While there are more financial hurdles to clear before redevelopment of three of the city’s important downtown properties can begin, Merrill said the approval of the block grants would greatly improve the prospects for successful completion.

“If all the (funding) pieces come together we will have about 68,000 square feet of space in the city center that has been rehabbed and brought up to code with new tenants,” Merrill said. “We are hopeful we will be able to get these projects done.”