(k) To undertake as a separate project the demolition, clearance, preparation for sale or other disposition, including the payment of relocation costs for occupants of such existing housing projects, and sale or other disposition of any of all of any existing housing project or part thereof assisted by the commonwealth, pursuant to section thirty-four, notwithstanding the provisions of clause (d) or section thirty-four, provided, that the department shall first have:
(1) found that all or a substantial portion of such existing housing project or part thereof requires such substantial modernization or rehabilitation to continue to provide decent, safe and sanitary housing and that, in the judgment of the department, the required substantial modernization or rehabilitation cannot feasibly be executed by the housing authority pursuant to this chapter;
(2) approved the proposed project, including a relocation plan for occupants of the existing project and a plan to make housing available on the land where the existing project is situated, in which the number of replacement units restricted as low-rent housing for occupancy by low-income persons or families shall be the same as the number of low-rent housing units in the existing housing project or part thereof that is subject to demolition or disposition, unless the department determines that: (i) a shortage of low-rent housing no longer exists in the applicable city or town; or (ii) the reduction in the number of units is necessary to increase the number of units that are accessible for persons with disabilities, which project may include plans to use a portion of such land for market-rate housing or for a public purpose ancillary to such development and approved by the department;