The city of Demopolis may have to repay part, or worst case scenario, potentially all of a $412,000 state grant from 2011.

The city was awarded the grant in 2011 to rehab a railroad spur at the industrial park on Highway 80 West.

Auditor Richard LeCroy spoke to the council about the grant during a work session Thursday afternoon.

The ADECA Community Development Block Grant project was to have created 100 jobs at the industrial park.

Most of those jobs were expected to come from Ctco Shipyard. However, the barge builders closed up shop after their owner died unexpected and the city took over the property in July 2011.

Without the expanded shipyard, the city ended up short of the grant’s 100 job requirement.

“Those hires were not met,” Lecroy said.

The auditors added that a letter has been sent to ADECA asking that credit be given for the jobs that have been created.

“We can’t control the fact that they closed up and didn’t open the plant. That was part of the stipulation. We knew that going in,” Lecroy said. “My suggestion is we get this cleared up as soon as possible. Hopefully, we won’t have to pay all that money back.”

The city cannot apply for any additional community development grants until the ADECA issue is resolved.

Mayor Mike Grayson said he is hopeful that the city will not have to pay any money back and that the number of jobs ADECA wants will be lowered, potentially to 42.

“They want to work with us,” Grayson said. “They really don’t want that money back.”

Grayson added that the Department of Housing and Urban Development is putting pressure on ADECA to close open grants.

“I’m very cautiously optimistic that we are going to be able to create these jobs,” Grayson said.