A derelict former public school in East Harlem will be converted into affordable housing and studio facilities for artists and their families, says a national arts developer. Costing $52.6 million, the enormous building will be converted into 90 units and 10,000 square feet of community space.

Construction on P.S. 109 at 215 E. 99^th Street is scheduled to start early next year now that the Department of Housing Preservation and Development has approved, and will announce in the next few days, grants worth about $20 million for the project, according to Will Law, chief operating officer at Artspace, a nonprofit real estate developer of the arts.

Once slated for demolition, Artspace, in conjunction with El Barrio’s Operation Fightback, an East Harlem community development organization, now has the development rights to P.S. 109. The Department of Housing Preservation and Development was handed control of the site by the Department of Education, and is providing tax credits and subsidies for affordable housing.

Built in 1898, with a gothic, almost castle-like design, the imposing building has fallen into disrepair since the school’s closure in 1996. Five stories tall with drip moldings, green spires corner towers and steeply pitched roof, it stands in stark contrast to its surroundings: a dilapidated housing complex, basketball court and low-rise residential streets. “In the community it’s an iconic building, it’s a landmark,” says Law. Fenced off with signs saying, “Keep Out – Poison,” the overgrown shrubbery, graffiti and boarded up windows, make it an eyesore and health hazard.

“We saw the gorgeous building, so the opportunity to give it a new life is quite exciting,” says Carol Corletta, president of ArtPlace, a public and private investment agency that worked with the National Endowment for the Arts among others to raise $1 million for the project. Corletta says the whole neighborhood will benefit from the plans. “The chance to reinvest in the artists, the location, and in the community – it’s a slam-dunk in our eyes.”

City Council member Melissa Mark-Viverito, who has supported Artspace’s plans, is equally enthusiastic. “I’m very excited about it,” she says. “I’m very proud of it.”

Yet squabbling about the best use for the building has continued for years. Local activist Gwen Goodwin organized the Coalition to Save P.S. 109, which successfully prevented the building’s demolition in 1999. Goodwin wants to see a restored school there, saying, “We are at a severe shortage of space in every district, East Harlem especially.”

School overcrowding is a hot topic in the area, and to Hector Nazario, president of the District’s Community Education Council, the cause is simple. “We have an overcrowding in East Harlem simply because 109 was closed,” he says.

But Mark-Viverito says that this argument is moot because the Department of Education didn’t want the school anymore. “They handed it over to DHP, it was just too costly,” she says, arguing, “Housing is our biggest problem.”

Law says that given the housing problems in El Barrio, “we fill a void.” He explains that an employee from the Department of Housing Preservation and Development first introduced him to P.S. 109, and as early as 2005 Community Board 11 approved the project.

A lack of agreement about the building’s use was the reason it fell into disrepair initially, argue Mark-Viverito and Law.  Law says that although in recent years “there’s been total consensus on the Community Board,” he admits that in in the past, “it was mired in a lot of community dissension.”

Daisy Matias, 52, who lives in the housing project opposite P.S. 109, remembers this well. “People kept coming and checking the building for years but nothing happened,” she says.

Matias is not particularly enthusiastic about the plans. “They could have opened it up as a school again,” she says wistfully. “The kids need it more.”

Ambivalence is rife among neighborhood residents. “It’s nice that it’s being used but we’d rather it was a school,” says Nilsa Diaz, 52.

Gentrification is the cornerstone of both sides’ argument. Over the last decade the area’s white population has increased by 55 percent, according to the 2010 census. Goodwin says most new residents will be paying rents that locals can’t afford. Describing the project as a “frivolous idea,” she argues current plans “doesn’t have a lot to do with residents of East Harlem.”

Diaz agrees, saying, “It’s for the rich, it’s not for the poor.”

But Law counters that Artspace is part of the solution, not problem. “Increasing gentrification is going on that is continuing to force artists out of Manhattan,” he says, and with apartments expected to rent for $550 to $1,100 a month, he argues that P.S. 109 will help alleviate the impact of rent increases. “We are staking out affordable housing,” he says.

Local artists are enthusiastic. “It sounds like a great idea; I loved it from the very beginning,” says Argentinean painter and Harlem resident Mariano Cinat, who declares he would jump at the chance to move into P.S. 109. “I see the need in the community for more art programs and for more people to get involved.”

But few of those affected, both locals and artists, were aware that the project could move ahead so soon. “I didn’t know,” says Matias. Diaz was unaware, too.

Five years ago Harlem sculptor Lina Puerta completed a survey about what kind of apartment she lived in and the size of her household, “but that’s all I’ve heard.” She adds, “I signed up to their mailing list but I haven’t received any newsletters or emails or updates.”

Law admits Artspace could improve its dialogue with the community. Once the go-ahead is officially given, he says, “then we will really start to liaise with the community.”

With the department’s approval of Artspace’s plans, tenants could move into the restored building in autumn 2013.

Law, who has worked on Artspace P.S. 109 for six years, says he is certain that when the project is completed, the benefits will be evident to most. “I believe it can be transformational,” he says.