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GREENSBORO — The City Council unknowingly gave its final approval for downtown development projects to use federal recovery financing, city and state officials determined Tuesday.

That decision — council members originally were told they would have a final chance to review the projects — could be rescinded if need be, City Manager Rashad Young told the council on Tuesday.

Regardless, no council members indicated that they wanted to prevent the projects from using the tax-exempt financing method.

But some council members said they felt misled by city staff, who repeatedly told the council members their December decision was procedural and members would have a chance to vet the projects in January.

“I specifically asked, 'Are we voting just to get in line for the money?’ I was told yes,” Councilwoman Mary Rakestraw said. “I said, 'Are we committed to any of these three projects?’ And they said no.

“Now, we have this whole hullabaloo going on,” she said. “I feel totally misled.”

Young said the city staff was under the impression that the council would have to approve the projects and rank them before a countywide bond authority approves them and forwards them to the state for consideration.

The bond program was created under the 2009 federal stimulus act. It allows private developers to finance certain construction projects at a low interest rate.

Three local projects qualified : a proposed downtown luxury hotel, an apartment and retail building on South Elm Street, and a new building for Deep Roots Market.

The city had until Dec. 15 to tell the state that it planned to use about $20 million in bond capacity. At the time, the City Council had not yet had an opportunity to review details of the projects, but members were assured they’d have the chance later.

But, as Mayor Bill Knight and Councilman Danny Thompson discovered while researching the issue last week, that was not the case. As far as state officials were concerned, the Dec. 15 decision was a final decision.

Councilwoman Trudy Wade said, “I don’t think we did our due diligence, and I don’t want that to ever happen again.”

Young said there has been confusion about the program as the state and cities try to work out the details quickly.

“The information we gave you on the 15th of December was the best information we had with us,” Assistant City Manager Andy Scott said. “There was not an attempt to deceive you.”

Throughout the day Tuesday, Young worked with state commerce and treasury officials to try to resolve the confusion. They concluded that the City Council could take a closer look at the projects, especially the hotel, which has changed substantially since mid-December.

Council members chose not to take that route Tuesday.

Local businessman Randall Kaplan, who discussed the hotel project on behalf of investors Tuesday night, assured the council the hotel would go through several levels of financial validation before it would be built.

He reiterated that the public would not be responsible for the project’s debt. “Being on the eligible projects list is just the beginning,” Kaplan said. “It’s just saying this would be something that would be great for downtown.”

The City Council will revisit the hotel project in the next week when it discuss whether the city should pay to build a parking garage to accompany the project .

Contact Amanda Lehmert at 373-7075 or amanda.lehmert @news-record.com