The corporation, a nonprofit agency of the Augusta Housing Authority, backed off the project after the Augusta Commission refused to support the project and receiving additional information about the 23 acres they bought last year.
The authority must now reimburse Progressive Redevelopment Inc. and The North South Cos. between $60,000 and $75,000 that they already have spent on the project, authority attorney Ed Tarver said.
The decision also leaves the future of the property, now zoned commercial, uncertain unless the authority complies with a request by Sammie Sias, the president of the Richmond County Neighborhood Association Alliance.
Mr. Sias asked the board to request a change in the zoning to R-1A, the most restrictive residential zoning, so that developers could not build such small houses on the property.
"You can't put multifamily housing on R-1A property," Mr. Sias said.
Residents of subdivisions adjacent to the property vehemently objected to the development because 30 percent of the units would be for low-income residents, which they contend would lower their property values.
"You can dress it up as much as you want, but when low-income housing comes in, your property values go down," said Sam Nicholson, the attorney for residents of Breeze Hill, Breeze Hills Estates and The Hamptons, which backs up to the site.
Mr. Nicholson said residents who bought houses in the Hamptons were promised there would be four phases in the development, but those plans were abandoned after the first phase of 40 houses.
"And that's the end of it," Mr. Nicholson told the board before asking them to go back to the drawing board and identify areas where there would not be opposition.
Authority members said they did not know of the four-phase development when they bought the property from the Hamptons developer.
DeCarla Brown, a Hamptons resident, said no one knew phases two, three and four were abandoned until February.
"It wasn't abandoned to us," she said.
"The plan was still being sold to people buying houses."
Authority Chairman Rodger Murchison said the housing authority was in the dark about the Hamptons project, too.
"We just saw some land, and we bought it," he said.
After the vote, Mr. Sias said the decision was what the city needed and the neighborhoods wanted.
"Everyone will benefit from this," he said. "We just hope they continue on with our suggestion of rezoning that property before disposing of it."
Reach Sylvia Cooper at (706) 823-3228 or firstname.lastname@example.org.