University Town Center has had several of its properties sold at auction because the sluggish economy proved to be a bad time for expansion of the retail and residential complex. (Michael S. Williamson/The Washington Post)

The Prince George’s County Council on Tuesday approved a $1.1 million tax deal for a development project at University Town Center — the entertainment, office and housing community that has struggled with vacancies and foreclosures since the recession.

The deal is part of a $3.5 million subsidy package that the county and Hyattsville are granting to developer Echo Realty in an effort to revitalize the town center.

Pittsburgh-based Echo Realty plans to build a $23 million development that includes a 55,105-square-foot Safeway and other retail and office space at East-West Highway and America Boulevard. County and city officials say the grocery store will serve as a strong anchor and will draw more people to the center.

The incentives also include $2 million from the county’s $50 million economic development fund, the second-largest investment from the fund since it was created two years ago. Hyattsville has committed $400,000 in tax credits.

The tax incentives will help strengthen and rebuild University Town Center, the county’s only mixed-use, transit-oriented development, said David S. Iannucci, a top economic development aide to County Executive Rushern L. Baker III (D).

The project is expected to boost the occupancy rate and the sale of condominiums at the $1.2 billion development within walking distance of the Prince George’s Plaza Metro station. In the past decade, the development has brought restaurants, a movie theater, condos and office buildings to the area.

But it struggled during the recession: Apartments sat empty, restaurants closed and some properties in the development were sold at auction.

At one point, University Town Center had a vacancy rate of more than 50 percent and the county worked with its congressional delegation to retain three federal agencies at the complex, Iannucci said.

Officials said sales are starting to pick up but many units remain empty. About 1,630 residential units have recently been built in the area, and nearly 600 units are under construction, Hyattsville officials said.

Prince George’s and Hyattsville officials said the proposed development will provide a more attractive entrance to the center with Safeway helping to draw travelers from the Route 410 corridor.

“Part of the struggle of that development is that the anchor is absent now,” said Jim Chandler, assistant city administrator and director of community and economic development in Hyattsville. “Safeway will serve as an anchor, will create more retail and residential demand for the area, and will help increase the occupancy rate.”

With the investment of $400,000 in tax credits, Hyattsville, which has an annual budget of $20 million, is betting this project will revive the Prince George’s Plaza area.

“That is the economic engine of our city,” Chandler said. “We believe that this project helps that area get back on track.”

The $1.1 million in tax relief approved by the County Council is part of a program approved by the Maryland General Assembly last year, which allows for a tax exemption to projects that are expected to create a significant number of jobs. The reduction will be spread over 15 years, officials said.

The $2 million economic development incentive is a conditional loan, Iannucci said. Conditions include the creation of 250 jobs — including 100 full time — and a commitment to contracting with local minority small businesses. If the conditions are met, the loan will be forgiven.

The Safeway project isn’t a new idea. It was first approved in 2006 and included the construction of 176 condominiums. The new proposal does not include the housing portion.

The Prince George’s Planning Board approved the project last month, and the District Council — the name the County Council takes when it reviews land-use matters — will review the case Monday.

If the District Council approves the plan, the developer’s next step is to seek construction permits. County officials said they expect the groundbreaking to take place in the spring.