SHELTON — The city has agreed to sell the former Star Pin factory to a Bridgeport-based company.

Primrose Companies, owned by John Guedes, will be paying the city $500,000 for the site. He told officials he will be submitting plans to convert the building into 77 market-rate studios and one-bedroom apartments.

The Board of Aldermen approved the sale during its March 12 meeting.

“The project will be a challenge,” said Mayor Mark Lauretti. “The site is not in good shape.”

He said the property at 267 Canal St. is riddled with environmental contamination. The city foreclosed on the site in 2018 for some $600,000 in unpaid back taxes.

The city has used federal and state grant money for remediation work there because of the environmental contamination.

The Shelton Economic Development Corp. received two offers for the property and established a three-member committee to review proposals from Primrose Companies and Winn Development of Boston.

SEDC President Paul Grimmer said the committee chose Primrose Companies based on a review of the developer’s experience, purchase offer, development costs, estimated tax benefits and total return on investment.

Winn Development, while a top developer in the field, was willing to pay the city only $1 while also seeking tax abatements over the first 10 years, said Grimmer. The Winn Development plan also lacked parking, with 71 spaces for 78 units on site.

Primrose Companies offered $500,000 and also plans to purchase a neighboring lot which would allow for some 128 parking spaces overall.

Primrose Companies would be paying $192,000 in taxes annually, with an overall return on investment in the first 10 years of some $1.6 million, and $4.4 million over 20 years, according to Grimmer.

Lauretti said he and Primrose Companies officials will be meeting with the state to finalize details on restoration of the long-vacant building, which was built in 1875 and is considered a historic site.

Early last year, the state Department of Economic and Community Development approved a $750,000 grant for remediation of hazardous building materials at the site.

Grimmer said the grant money was being used to remove lead, PCBs and asbestos from the 118,000-square-foot building. Running concurrent with that work was a soil and groundwater assessment to be performed by Tighe and Bond. In addition to the most recent grant, the city received a $200,000 grant to complete that assessment.

The city started the Canal Street Revitalization Program in 1996. For the past three decades, through a series of grants and private partnerships, the city has cleaned up or demolished 13 of the 17 properties along the street — and the latest work is focused on the historic Star Pin building, the oldest industrial building in the city, and along Canal Street.

The Star Pin Factory made millions of brass pins, hooks and buttons for nearly 110 years. In the early 1980s, the Star Pin Co. left Shelton, but the building retained its name.

Over the past 30 years, the property housed a variety of manufacturing firms, some of which conducted plating operations. The property has been largely vacant over the past 15 years and age and weather are beginning to exact a toll on the building’s structural integrity, officials said.

The property now is part of the city’s master plan for redevelopment, said Grimmer, and the city has approved reconstruction of the property for residential purposes, with the approved plan allowing for 72 residential units and 128 parking spaces.