The future of the Penn Theater is in question following the state’s rejection of a grant application by the city redevelopment authority.

Representatives from the authority met with the state in Harrisburg Wednesday to discuss the delays in $300,000 worth of 2013 Community Development Block Grant funding.

The state Department of Community and Economic Development has not allocated the money to the authority due to concerns on how some of the money would be spent,

Executive Director Art Cordwell said at the authority’s Thursday night meeting that most of the concerns are in the process of being resolved, but added the state will not allocate money to the authority to spend on mortgage payments for the Penn Theater.

The authority requested $80,000 of the CDBG funds be spent on acquisition of property. About $14,000 of that money would go to mortgage payments on the theater.

The state sent a letter to the authority April 22 addressing the concerns with the application.

The state told the authority it will not allocate any money to the Penn Theater because there is no identifiable project set to be completed within three years, a requirement of the CDBG program.

The authority bought the building in 2007 for about $250,000.

Cordwell was not optimistic on the outlook of the theater following the decision by the state.

“We’re really in a tough position here,” he said.

Cordwell said the authority has little option with the building. He said the authority will have to find other income to support the mortgage or find a buyer to take over the structure.

Cordwell said the authority is seeking to find a nonprofit or a private business to take over the structure.

“We had people inquire about it,” he said. “But we haven’t been able to work out any details.”

The authority’s mortgage on the building is about $15,000 per year, authority solicitor Don Graham said.