JEANNA DUERSCHERL The Roanoke Times

Renovations on Day Avenue are under way again — only this time the work is being done by private developers. After mounting debt and a sputtering housing market stalled the Roanoke Redevelopment and Housing Authority's plans to renovate 17 apartment buildings into single-family homes, the authority has elected to sell the remaining unfinished homes to developers.

It was supposed to be an instant neighborhood.

The Roanoke Redevelopment and Housing Authority bought 17 low-rent apartment buildings -- almost the entire 400 block of Day Avenue Southwest -- for a relative pittance and was renovating them into well-appointed, historic homes.

Then the construction debt mounted, the housing market sputtered and the project went into the mothballs before it was half done.

Now, after a year and a half dormant, the project is rolling again.

But it's private developers instead of the publicly funded housing authority doing the work -- and taking the risk.

Since January, the authority has sold four of the unfinished homes to two different developers. Four more are set to be sold in the next month to one of those developers.

"It should end up where it was intended to end from the beginning, but the mechanism has changed," said Glenda Edwards, executive director of the housing authority. "I think it's a better way to get it done."

In redevelopment, Edwards said, "the appropriate and best role is for the housing authority is to be the spark ... to make the effort appealing for private investors."

The authority always intended to complete the project, Edwards said, but came to the conclusion that it needed investors to get it done. So the authority put out word that it was looking for people to buy the houses and renovate them in a way consistent with the original plans.

In January, Dail Stancill and Piedmont Properties bought two of the houses for a total of $68,000.

David McCray heard about those sales and got interested himself. In April, he and partner John Lipscomb and their Virginia Appalachian Properties bought two of the houses for a total of $100,000.

"I felt like it was a good opportunity there, and frankly I was afraid if I didn't take advantage, it wouldn't be there the next day or the next week," said McCray, who has renovated numerous homes in the Old Southwest neighborhood.

But if it weren't for the availability of historic tax credits for the work, he wouldn't be involved.

He said he will hold onto the houses and lease them as single-family homes for five years.

The 17 houses, which account for all but three properties on the block, were once divided into 70 apartments, all owned by the Christian Housing Fellowship. Old Southwest leaders called the area the most troubled block in the neighborhood. Drug sales and prostitution were common there, they said.

The housing fellowship and its principal, real estate agent Dana Walker, decided to turn over all the properties to the housing authority in May 2005. The city of Roanoke paid $344,000 to retire the remaining debt associated with the properties.

The authority dubbed the project Miller's Hill, after what the area was once called, and set to work refurbishing the buildings as single-family homes.

The houses sold quickly, and at surprisingly high prices for the neighborhood -- most near $300,000. Part of the appeal to buyers was the notion that within a year or so, nearly every house on the block would be as nice as theirs.

But the housing market was slowing. The authority just wasn't willing to take on more debt until it could sell the houses it was working on, Edwards said.

Now, the goal is to get the authority's money back out of the project. The four houses sold so far went for amounts roughly equal to what the authority has invested in them. That doesn't include the money the city put up to purchase them.

In all, the city and the authority have $3.7 million invested in the project, almost all of which is borrowed. Only the city's initial payoff of the debt on properties involved public money, Edwards said. Total return on the project so far is $2.7 million.

J.J. White, who bought the first of the renovated houses in July 2006, said he is glad to see construction under way again. He believed private investors should have been involved all along.

But he's adopting a wait-and-see attitude about the latest work. He said he was a little disturbed to hear that some of the houses will be rented. He said he would rather see them owner-occupied.

McCray still sees the neighborhood as a fine place in the making.

"The whole complexion of that street should change in the near future," he said.

White and his wife, who had their first child six weeks ago, say that despite the stall in the project, they're seeing good signs in the neighborhood.

Most of the block remains unoccupied, and the former suburbanites are still getting used to strangers walking their alley at all hours. White's lawn sprinklers were recently stolen.

But the authority did renovate and sell six of the homes, and White said several of the owners have small children. He feels good about seeing them playing outside.

"That's what we had envisioned when we first moved there," he said.