BELFAST – The City Council has agreed to hold a public hearing on a Community Development Block Grant that would help a developer build low-income housing.

The council voted 3-2 on Tuesday to hold a public hearing Feb. 7 on a $400,000 infrastructure grant for Realty Resources of Rockport.

Reality Resources principal Joseph Cloutier hopes to use the money to extend a city sewer line from Searsport Avenue to his Ocean East project on Ryan Road overlooking Penobscot Bay.

The $4.5 million project already had received conditional planning board approval as a 42-unit condominium. Cloutier told the council he since has determined that the cost of bringing the sewer to the development restricted his ability to market the condos.

Under the new plan, they would be rental apartments, not tenant-owned condos.

If the grant application is successful, he said, the units would be marketed as subsidized affordable housing.

City Planner Wayne Marshall said Wednesday that the public hearing would gauge the community’s support for the project. When the hearing is concluded, the council still would have to vote to authorize the filing of a grant application for the CDBG funds. Marshall noted that the grant would cost the city nothing other than the time it would take him to prepare the application.

“These are highly competitive grants,” said Marshall. “There is no guarantee that we are going to get it.”

The council has identified affordable housing as a critical need citywide. The recent boom in local real estate has priced many low- and moderate-income families out of the market. The Ocean East proposal would create 22 three-bedroom apartments and 20 two-bedroom units. Rents would be subsidized a maximum of 50 percent and the most expensive apartment would be in the range of $640 per month.

Some attending Tuesday’s meeting suggested that multifamily housing should not be located off Route 1 with a prime waterfront view. John Falkingham, who owns a single-family home on the road leading to Ocean East, asked the city to “slow down” on the project.

“Think it over,” said Falkingham. “Make sure this is where this project should be.”

Planning board member Gene Kirby also was less than warm to the proposal. Kirby suggested that Searsport Avenue was the wrong location for an affordable-housing project. He said the city should not help Cloutier “get out of a spot” with the sewer grant.

“‘Project’ has a connotation to it and I don’t think that’s what Belfast is all about. Putting up on a hill a unit called a ‘project’ is not solving our problem,” Kirby said. “Please don’t build ‘projects.’ That’s the worse thing you can say about that kind of housing.”

After a lengthy discussion, Councilors Michael Lewis, Phil Crosby and Tammy Lacher-Scully voted to hold the public hearing. Councilors Charlotte Peters and Walter Ash voted against the hearing. Both said they believe the development should be closer to downtown, said Marshall.

Marshall said if the council decides to support the grant application and the Ocean East development wins CDBG approval, the entire project would have to come back before the planning board. He said the grant application was due Feb. 22 and the awards would be announced in June by the Department of Economic and Community Development. Should all that occur, work on the development could begin by late summer, he said.