A New York developer is one step closer towards purchasing the Avalon Hotel.

The Erie County Industrial Development has approved $46 million in financing for GoodHomes Communities LLC.

The funding will be used for the purchase and full renovations of the Avalon.

The funding is provided through bonds, which GoodHomes will be responsible for paying back.

"We're in a lot of different municipalities," said David Mitchell of GoodHomes Communities LLC. "The people here really want to make it work and that gives us great confidence as investors."

The New York City developer will transform the existing hotel into 219 studio and one-bedroom apartments.

There will also be retail space along the first floor.

Rent rates will range from $750 to $1,000 a month, with one-year leases.

"Housing is needed in Erie," said Mitchell. "I think it's particularly needed for this tenant group. The workforce tenant group. There's a tremendous shortage of housing and it doesn't really exist in downtown Erie."

If all goes as planned, Mitchell hopes to begin construction on October 31. The project is expected to take 14 months to complete.