Killam Properties has announced that phase one of construction in the redevelopment of Charlotte Court on North River Road in Charlottetown has begun.

The project, which was awarded to the property rental company with APM Construction Services acting as project manager in June after a tender process by the provincial government, will cost approximately $11 million and will see the 48-unit senior citizens complex at 300 North River Rd. redeveloped into a modern and energy-efficient complex with 98 units in two phases.

Phase one consists of 49 units expected to be ready for occupancy next July in a three-storey building that will include an elevator, social room, laundry facilities on each floor and a fitness room.

The unit mix will feature one and two-bedroom units, including 12 barrier-free units designed for seniors with disabilities.

The units will be offered at an affordable rate and will be subsidized and leased by PEI's Department of Community Services, Seniors and Labour, which is consistent with the current program with the property. In return for the subsidized rates, Killam Properties will receive a $1.5 million capital contribution, paid for equally, by the federal and provincial governments, which will be forgivable over 10 years

Phase two, expected to be ready for occupancy in June 2012, consists of a 49-unit luxury building with units up to 1,200 square feet having five appliances and upgraded kitchens with granite countertops and other modern features. Amenities include underground parking, a fitness room and a social room.

The project is being led by APM CEO Tim Banks, who is also a director of Killam Properties.

Banks said the finished project will be a quality complex that will alleviate any concerns over standards current tenants may have had about the property.

"I think what you'll find a the end of the day after the two phases are complete , it's certainly going to be a quality project for the neighbourhood and it's quite exciting."

Killam Properties will benefit from the promotion of the company with the project as well as gain a solid tenancy but with a less than seven per cent return of investment, it's good for the province as well.

"In this case, it's an extremely good deal for government"