A development of 12 flats is to be built in the Hilltown as a result of an agreement between Dundee City Council and Hillcrest Housing Association.
The flats will transform a derelict site at Ann Street and will be wheelchair-accessible, helping the council to improve its number of adapted homes.
They will also help with the rehoming of tenants from council houses scheduled for demolition.
Dundee City Council is providing £240,000 towards the cost.
That sum from the Scottish Government’s Affordable Housing Investment Programme (AHIP) was initially sought for the development of eight units in the Hilltown, a priority area within the local housing strategy.
The proposed site for the eight flats was land at William Street, which is currently used as open space.
Consultation revealed that residents value the land as open space and there would be planning objections if the council moved forward with that scheme.
After a review of alternative opportunities to comply with the criteria of the government and related schemes, attention was focused on the proposed signature building intended for the council-owned vacant site formerly occupied by the Nelson Bar at the corner of Ann Street and Nelson Street.
For some time the housing association had been trying to build 12 flats on the site but had been unable because of lack of funds from the AHIP.
A report to Monday’s meeting of the council’s housing, contract services and environment committee states that, to meet all requirements, objectives and the 2010/11 timescale, it is felt the best way to proceed would be for the council to enter an agreement with Hillcrest with its £240,000 towards eight of the 12 units.
The block of 12 flats would be owned and managed by the council and the developers would be Hillcrest, which owns adjacent properties.
Committee convener Councillor Jimmy Black said, “This will greatly enhance the area because it will be on a derelict site and I am sure that local people will welcome the development.
“They will be modern, very energy-efficient homes that will help people reduce their fuel bills and the new building will have a lift and the council flats will be wheelchair-accessible.”
He added, “This will help the council improve its provision of adapted homes.”
The council has previously received £800,000 from the government for 32 wheelchair access flats from the same source.