The project will only work because it will be heavily subsidized. Though, it does seem kind of expensive to spend $10 million to renovate four tiny three-story buildings.
If I'm not mistaken, the developer is investing $4 million ($1.5 towards the purchase and $2.5 towards the renovation.) in the property, so as long as he can recoup at least the $4 million with this investment he'll turn a profit.