On the heels of a government e-mail that shows the proposed Caird development may not have qualified for federal stimulus funding, some city commissioners are raising questions about the community’s nearly yearlong debate over the proposal from the Rocky Mountain Development Council.

But RMDC officials say they’re not convinced their plans for 30 units of low-income senior housing and possible commercial development at the mostly vacant industrial site were unfeasible, and they say they approached the project in good faith.

In an e-mail, a U.S. Department of Housing and Urban Development specialist said RMDC’s application for $2.07 million in federal funds may not have been eligible because the Caird site is still home to a working business, while government rules require the money to be used to buy vacant, abandoned or foreclosed properties.

The HUD specialist also said the concept of using some of the land fronting on Montana Avenue as a commercial development — with a fitness equipment showroom and other retail spaces — may not have fit into the program’s rules either. The government requires that business developments built in conjunction with housing must serve the residents of the site – a grocery store or pharmacy would have worked, for example.

Commissioner Paul Cartwright, who voted against sponsoring RMDC’s grant application, said he was disappointed the information came to light after the debate was over.

“I’m disappointed that the community had to go through that debate when it looks like any kind of … grant was a long shot and a mixed-use development was never in the cards,” he said.

Commissioner Alan Peura, who voted alongside Cartwright, shared similar concerns with the Independent Record.

But RMDC Director Gene Leuwer said he doesn’t necessarily agree with Cartwright’s interpretation.

“I think we’d have to work through that issue and see exactly what it meant,” he said. “I appreciate HUD’s answer — I just don’t know that that would be fatal to the deal.

“I think our due diligence was sufficient, given the point we were at with the project,” he added. “As you get into any deal, those sorts of issues come up. That’s just part of what we do in those developments.”

Commissioner Matt Elsaesser, who supported the grant proposal, also defended RMDC’s efforts.

“RMDC, which has a great track record, believed there was a reasonable chance of successfully applying for a variety of funding sources for this project,” he said in an e-mail.

As for what’s next for RMDC and the Caird property, there’s no certain answer. The Caird site is still for sale, and the property’s environmental contamination levels and cleanup costs are now publicly available — and are less than what was expected, RMDC has said.

Commissioners are reviving the discussion over a proposed tax-increment financing district for the area, and if another buyer comes forward, improvements to the site would raise funds for upgrades to Helena’s historic railroad district.

Leuwer said RMDC officials know there’s still plenty of need for low-income housing for both seniors and families, and they’re looking for other projects. He’ll meet with state Department of Commerce officials Monday to discuss the possibilities for getting some of the state’s $19.6 million allocation in federal housing-stabilization funds to use for other purposes. He said the organization had reviewed the possibility of using the grants to buy foreclosed homes and will revisit that topic.

Reporter Larry Kline: 447-4075 or larry.kline@helenair.com

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