PORTLAND — The Maine Housing Authority has given a “letter of commitment” to the developers of a controversial housing project in Portland. The deal is expected to close later this week.

The 35-unit Elm Street Terrace project was approved at a $265,000 per unit cost, up from the initial application cost but down from a revised application that came in late last August at $314,000 per unit, according to the agency.

The project, which would redevelop a 102-year-old building at 68 High St. and an adjacent vacant lot, has been cited by state Treasurer Bruce Poliquin as an example of a housing project that is unnecessarily expensive due to the agency’s lax policies on cost controls. Moreover, he has said that policies that give preference to rehabilitation projects in downtown areas drive up costs.

The High Street building was formerly a children’s hospital and was most recently used as administrative offices for the University of Southern Maine.

Poliquin, who serves on the Housing Authority’s board of directors, said the price reduction is due to the new scrutiny of the agency by him and four new board members appointed by Gov. Paul LePage nearly two months ago. Still, while he is pleased with the lower price, the cost-per-unit is still too high, he said.

“I am not satisfied that we can’t do better than spend $265,000 for 1,100-square-foot apartments when taxpayers are footing the bill,” he said today in a telephone interview.

Dale McCormick, the authority’s executive director, said the agency has instituted several cost controls since she took over in 2005. She said she has demanded that Elm Terrace’s developer, Community Housing of Maine, reduce the development’s proposed cost from $314,000 per unit to $265,000 per unit.