The city's been working with the non profit Siouxland Housing Development Corporation since 2010 to put six row house on Douglas Street.
The owner-occupied development was geared toward lower income families.
The city set aside a $268,000 federal grant for the development. However, the Siouxland Housing Corporation was unable to get gap funding to finish the project.
"We do have a deadline to spend these NSP funds, the longer we continue to hold them on this particular project the closer we get to the deadline that will actually lose those funding sources," explained Community Development Operations Manager Jeff Hanson.
About $54,000 has already been spent on design. The city plans to keep the blueprints in case the project can be resurrected in the future.
The remaining grant money, $216,000, will be redirected toward a different project on the near northside.