Progress on a U.S. Housing and Urban Development, or HUD, loan has stalled for a developer in Forsyth County.

A 3-2 county commission decision Tuesday means there won’t be a public hearing for the HUD Section 108 application sought by developer Almquist Hansen.

County Attorney Ken Jarrard said the commissioners’ vote will halt the process "for the immediate future." Patrick Bell and Pete Amos were in favor of a hearing.

"My communication to DCA is going to be given that the board took no further action with respect to the public hearing, we’re asking that you discontinue any processing of the application until further notice," Jarrard said. "Practically speaking, it’s over."

The Kennesaw-based developer, however, still hopes to attain the nearly $4 million Section 108 loan to help fund construction of Towne Club at Windermere, a proposed high-end senior rental housing community.

The more than $30 million project qualifies for this type of HUD loan because it would reportedly create jobs for low-to moderate-income workers.

The local government, in this case Forsyth County, is needed to submit the application and, if the loan is approved, act as a conduit between the developer and state and federal governments.

Almquist sought the second public hearing, which is required before the county can submit the application.

The first hearing, held in April, drew concern from residents and commissioners, who considered rescinding the vote a month later.

Commissioner Brian Tam cast the tiebreaking vote in May to continue sending the "pre-application" on to the state Department of Community Affairs for feedback.

A letter from the DCA in late November again positioned Tam as the tiebreaking vote.

Tuesday, he sided with Commissioners Jim Boff and Todd Levent to stop the process.

"I said [before that] if at any time, I felt the county would be penalized for future grant consideration or held responsible for any of the loan amount, I would not support it," Tam said after the meeting.

"The way it’s structured now, those two considerations are not able to be ruled out."

The letter from DCA states that Forsyth will have "no general obligation for repayment of the 108 assistance imposed on the county by DCA."

The county would be subject to the typical "pledge of grant," the letter states, which Jarrard explained means its future grant funding from DCA could be blocked if the loan wasn’t repaid in the 20-year period.

"The general structure of the deal now is the state, not the county, would have the security interest because we would have no direct monetary obligation in the event of a default," he said. "The only obligation would be a potential block on future grant funding."

Records show Forsyth County has not sought a DCA grant in the past.

Ethan Underwood, attorney for Almquist Hansen, said after the meeting that his clients will continue to work with the commissioners and DCA on a proposal.

The developer had worked to get specifics that would satisfy the commissioners’ concerns, including lowering the original requested amount of $5 million to just less than $4 million, Underwood said.

Loans of more than $4 million could have caused the county to have some financial obligations, he said.

"What we’re now working with is whether or not DCA can say that there is absolutely no circumstance whatsoever that it would withhold funds from the county in the event of a default," he said. "DCA did say it was a very unlikely scenario."

Underwood said Almquist Hansen officials aren’t sure what impact the lack of a Section 108 loan could have on the project.

The group initially planned to seek another HUD loan, under Section 232, which covers senior rental housing. It learned, however, that getting one government loan did not guarantee the other, he said.

The developer has discussed the possibility of working through the Forsyth County Development Authority to secure about $26 million in private bond financing.

A Section 108 loan, however, would be required to get a private bank to underwrite the bonds, Underwood said.

"It’s a financial mechanism the county’s not familiar with, and we’re working to get folks comfortable with," he said.