A delay in state funding is causing financial problems for the city redevelopment authority and could delay the Centre City project in downtown Butler.

Art Cordwell, the executive director of the authority, said the state has not released last year’s $300,000 Community Development Block Grant to the authority, causing delays in paying for the projects that are financially tied to these funds.

The money is used for a variety of items, including administrative costs and improving public infrastructure in the Centre City project, which will bring an 80-room Marriott Springhill Suites hotel, 225-lot parking garage, and a new Rite Aid pharmacy downtown.

As part of the project, the authority is planning $2 million worth of street improvements to the block bordered by Main, South McKean, East Cunningham and East Jefferson streets.

Most of the work will be paid through a tax increment financing district, but the authority wants to use $133,000 of the grant for street improvements.

“The Centre City project is dependent upon getting this money,” Cordwell said.

However, the state Department of Community and Economic Development has concerns about the spending plan, which was submitted by the authority last year.

Cordwell said the state sent the authority a letter April 22 asking for clarification on aspects of the street improvements. One of the issues the state has is whether the street improvements meet the objectives of the CDBG program.

All grant money through the program must benefit low-income individuals.

Cordwell said the street department would help spur economic development throughout the city.

“We believe the street improvements are for the public good,” he said.

Steven Kratz, a spokesman for the Department of Community and Economic Development, said the state will meet with the authority within a couple of weeks to discuss its concerns with the grant.

Kratz said the department expects to release the administrative funds and money for other projects following that meeting, but would not release money for the Centre City project until the concerns are addressed.