CITY HALL — Officials here have worked out a deal to resolve part of an affordable housing dispute that arose earlier this year when City Hall disclosed that developer JSM Construction failed to provide at least 52 low-income units the company agreed to build as part of its development plans in Downtown.

The deal, announced this week, is with developer Neil Shekhter, president of NMS Properties and a partner in JSM’s housing project.

Under the terms of the agreement, Shekhter has committed to provide between 14 and 17 units to fulfill the affordable housing requirements for three market-rate apartment buildings he owns and which were part of the JSM deal, said Alan Seltzer, Santa Monica’s chief deputy city attorney.

The agreement gives Shekhter several years to construct some of the units but requires that he place additional deed restrictions on other apartment units he owns in the meantime.

Under the terms of the agreement Shekhter has the option to either incorporate the affordable units into market-rate buildings or construct them “off site” in a dedicated low-income project. More units are required if they’re built off site.

All of the affordable units must be deed-restricted for “very low-income” tenants who earn at most 50 percent of median income, according to the agreement Seltzer negotiated.

“The agreement recaptures three market rate projects and provides for the fulfillment of the affordable housing obligations originally made conditions of their approval,” he said.

City Hall lawyers continue to hold talks with other partners in the JSM deal, according to Seltzer. There are at least five other market-rate buildings bundled into the JSM deal that have unfulfilled affordable housing requirements.

Problems with the JSM deal surfaced in April after two sites, 711 Colorado Ave. and 1514 Seventh St., that had been slated for affordable housing construction as part of the deal were sold in a foreclosure auction. A 26-unit affordable building had been planned for each site to satisfy affordable housing requirements for other market-rate buildings.

The president of JSM, Craig Jones, has reportedly left the country and is living in Southeast Asia. City Hall officials have acknowledged they received inadequate security to guarantee that the affordable units Jones promised would be built.

Without disclosing details of City Hall’s strategy, City Manager Rod Gould has said he is “committed to getting the [promised] affordable housing units built and occupied.”

Reached this week, Shekhter declined to comment on the agreement with City Hall, stating that parts of the deal were yet to be finalized.

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