The sale of the former Princeton Hospital building to Avalon Princeton LLC, the developer with plans for a rental complex at the Witherspoon site, has closed, Princeton HealthCare System announced Tuesday.

The site includes the hospital building, its parking garage, nine houses on Harris Road, and two medical office buildings on Witherspoon Street. AvalonBay, the developer, now owns the hospital building, garage and Harris Road homes, while Herring Properties owns the medical offices, which they plan to renovate and lease for commercial and medical offices.

The hospital building will be demolished to make room for the 280-unit development of apartments and townhomes. Just how that demolition will progress is a topic of controversy and concern among residents of the area, who formed a citizens’ group, Association for Planning at Hospital Site LLC. Last week, Mercer County Superior Court Judge Mary Jacobson ruled against a lawsuit by the group seeking to block the development.

Members of the group say Judge Jacobson’s opinion contains factual errors, which they are discussing with their lawyers. In an email, APHC member Areta Pawlynsky said that Princeton Planning Board attorney Gerald Muller and AvalonBay lawyer Robert Kasuba’s “rewriting of environmental history” from AvalonBay’s first application “appears to have been accepted without questioning. No new environmental submissions stipulated in the consent order was interpreted as reliance on the detailed record of the first application, yet the Planning Board didn’t try to resolve those outstanding issues,” Ms. Pawlynsky wrote.

Judge Jacobson dismissed all the counts of the lawsuit filed by APHS, the second citizens’ group to form due to concerns about the AvalonBay development. Princeton’s Planning Board rejected the developer’s first application for the hospital site in December 2012. AvalonBay then sued, and the municipality negotiated a consent order with the developer, which then submitted a revised application. The Planning Board approved that submission last year.

Among the points made in her opinion, Judge Jacobson said that health and safety impacts cited by the residents’ group are not supported. But APHS disputes that conclusion with several points about environmental testing, heavy metals, and contaminants flushed into old hospital drain lines.

Princeton Council voted in January to hire a licensed state remediation professional (LSRP) after hearing several citizens air their continued concerns about the demolition. The Council is expected to hear a report by that person at its meeting next Monday before taking another look at the developer’s agreement.

Jon Vogel, AvalonBay vice president, told Council at a recent meeting that a public meeting about the demolition plan will be held once the sale is closed. Contacted Tuesday, he said the meeting is still to be scheduled.