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EAST CLEVELAND, Ohio -- Apartments in East Cleveland are the opening salvo in a push to blur lines between the region's poorest city and the humming employment hub next door.

The Finch Group and University Circle Inc. are planning a 20-unit, townhouse-style project on Euclid Avenue. Just into East Cleveland, the $5 million development would bring rare new construction to a strapped city.

It would test geographic and psychological boundaries, built up during decades of distrust and disparity. And it could provide a growth path for University Circle, a fast-growing district struggling to make room for residents amid hospitals, schools and cultural institutions.

"Everybody knows East Cleveland," said Gary Norton, the city's mayor since January 2010. "Everybody knows the bad, but we're focusing on the good. One of the advantages that I can claim no credit for, whatsoever, is our location."

That location, near a landlocked job center, has long been the subject of spillover speculation.

Community Housing Solutions, a development agency based in Cleveland, once hoped to build homes and a park east of Lake View Cemetery. Those plans dissolved when former Mayor Eric Brewer accused the agency of mismanaging federal funds and foundation money. Community Housing Solutions disputed those claims.

Now a CircleEast plan has re-emerged, starting with 20 apartments on 1.5 acres between Lakeview Road and Auburndale Avenue.

That property is part of a block owned by University Circle Inc., a nonprofit community group shifting from land holder to developer.

University Circle Inc. would own and develop the CircleEast Townhomes with the Finch Group, a Florida developer with several properties in Greater Cleveland.

Chris Ronayne, president of University Circle Inc., said he's pitched the project to nearby University Hospitals as a potential home for nurses and other employees. Construction could start next month and finish in mid-2012.

"University Circle clearly needs to expand, and there's a significant amount of available land at reasonable prices in East Cleveland," said Wes Finch, chairman of the Finch Group. "I think it can open up tremendous potential economic development, not only in construction and direct jobs but also to provide housing so people remain in Greater University Circle."

Finch says Park Lane Villa, his high-end apartment building off East 105th Street, is full. Other developers are building apartments along Euclid Avenue and on Hazel Drive. And the shaky housing market hasn't stopped townhouse sales at the 27 Coltman and Circle 118 projects at University Circle's eastern edge.

The CircleEast apartments - two bedrooms, 2.5 bathrooms, with two-car garages - would rent for $930 per month, before a one-month discount for employees of University Circle institutions.

East Cleveland and Cuyahoga County plan to allocate federal money to the project, so 12 of the apartments would carry income limits of 120 percent of area median income. That shakes out to the low $60,000s.

The public money flowing into CircleEast comes from the Neighborhood Stabilization Program, a federal grant program focused on improving areas devastated by foreclosures and blight. East Cleveland has spent nearly $2 million on demolition near the CircleEast site. Now Norton is committing $150,000 in federal funds to the apartments.

Cuyahoga County's land bank is kicking in $1 million in neighborhood-stabilization funds.

And tonight, the Cuyahoga County Council will see a request from the county development department to grant $1.9 million in federal money to CircleEast. The county must use those funds, awarded as part of the federal stimulus program in 2010, or it might lose them next year.

"We're doing this because it's a good project," said Nathan Kelly, deputy chief of staff for economic development. "We're not doing it because of a timeline."

County Executive Ed FitzGerald said it's not the county's role to be an entrepreneur or primary risk-taker. But the county can step in and share the burden, supporting small projects and driving investment where the private sector might balk.

"This would not have happened without the county," Ronayne said of CircleEast. "They're the 900-pound gorilla here."