When Alvin Nash resigned from the Roanoke City Council, he vowed to seek an investigation that he said would clear his nonprofit housing group of claims that it violated federal regulations in dealing with the city.

Nearly a year later, Nash has yet to request an inquiry. And earlier this month, he accepted a plan that gives Blue Ridge Housing Development Corp. six years to pay $261,427 it owes to the city.

"The bottom line is that I made a mistake, and I don't want to have sour grapes over it," said Nash, president of Blue Ridge, one of the city's best-known community-development groups. "We want to move forward."

The controversy involved federal grant money that went to the group's mission of providing homes for low-income families. What could have been a simple funding dispute was complicated by a conflict of interest that Nash had by serving as both president of Blue Ridge and a member of the city council, which disbursed the grant money to his group.

Nash resigned from the council in February, in the midst of the dispute.

Even though Blue Ridge had agreed not to seek federal funds through the council while Nash was a member, Nash said he believes his dual role caused the city to take a tougher approach during negotiations over the amount the group owed from past projects.

"I just think that with an average person, they [the city] would have looked at this and said it doesn't make sense," Nash said of the debt assigned to Blue Ridge. "They didn't want to do that."

The grants in question were funded by the U.S. Department of Housing and Urban Development and administered by the city. When homes that Blue Ridge built using the grants generated revenue upon their sale, the plan was for the proceeds to be returned to the city, which maintained the funds in an account for future programs.

But Blue Ridge kept the money "without the prior consent of the city, which is a violation of the contract and HUD rules," city budget team leader Frank Baratta wrote in a Dec. 17, 2008, letter to Nash obtained earlier this year through open-record laws.

Although the city said the unpaid revenue could be as high as $333,000 for a number of projects, the agreement with Blue Ridge sets the debt as $261,427 for 11 houses that the nonprofit built as part of the Southeast by Design project.

Nash -- who resigned from Blue Ridge two days after Baratta's letter was written, then rejoined the group after resigning from the city council in February -- took exception to the city's assertions.

In a letter announcing his resignation, Nash wrote that his decision was "influenced by recent articles in The Roanoke Times and the suggestion from City staff that Blue Ridge may have violated City contracts or HUD rules. These are allegations that are untrue and I cannot ignore. I want the truth to be told and I want Blue Ridge Housing to survive. Blue Ridge will sit down with the city, request a HUD review, and work out a plan to insure that both parties are paid whatever funds are owed."

In an interview Wednesday, Nash said he never requested a formal review by HUD, even though he might at some point in the future.

"The bottom line is that I signed a contract that didn't allow us to recover our costs, and that was my mistake, the way it was written and the way it was worded," Nash said.

Nash still maintains that Blue Ridge did not run afoul of HUD regulations. "The fact of the matter is that HUD did not see a violation," he said. "They didn't take the initiative to step in, and we didn't invite them to step in."

No one has suggested that Blue Ridge did anything with the unpaid money other than turn it back into its operations.

During talks with the city, the nonprofit argued that its contract did not clearly define the costs of building the houses, or how much of the grant money the nonprofit could retain to cover those expenses.

The city first began to raise questions about the unpaid revenue last year, when Blue Ridge was being forced to scale back its operations and cut staff to deal with the national housing slump.

"We're trying to get back on track," Nash said. "But we're tied to the housing market, and that is what it is."

Even though Nash is no longer a city council member, Blue Ridge must wait another three months before it can apply for federal Community Development Block Grants or HOME Investment Partnerships Program subgrants. That was part of an agreement made last year to avoid a conflict of interest that was created when Nash was appointed to the council to fill an unexpired term.

Federal regulations prohibit members of elected boards that administer grants from receiving the federal funding.

Baratta, the city official who has been working closely with Blue Ridge, said the recently completed agreement includes monthly payments that "start slow and increase, giving Blue Ridge an opportunity to get back on their feet."

Under the six-year plan, Blue Ridge will pay $1,089.20 a month during the first year, an amount that gradually will grow to $5,466.40 a month by the time the plan ends in 2015.

While Nash has taken issue with the city's assertion that Blue Ridge violated the contract and HUD regulations, Baratta said he never meant to ascribe motives to either the group or its leader.

"Words can be charged, and they can mean different things to different people," Baratta said. "There are acts of commission and there are acts of omission."

Baratta said he understands that Nash may have been concerned about the perception of Blue Ridge.

But, he added, "I think everything we've said before is still applicable. We've said they had a contract that wasn't fulfilled, and that was my opinion."

Staff writer Mason Adams contributed to this report.