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DANVILLE — State officials have denied low-income housing tax credits for a proposed $15 million development on various vacant lots in Danville.

Danville Housing Authority board members formed a separate nonprofit organization to apply for the tax credits through the Illinois Housing Development Authority in an effort to finance 70 units of affordable housing, including townhouses and single-family residences, that were to be built on vacant lots.

Many of the sites are city-owned and scattered throughout the downtown and nearby neighborhoods within walking distance of amenities, including the bus station, the library, shops, restaurants and government offices.

For at least a year, housing authority officials had been working with city officials to identify vacant lots that could accommodate the new housing.

Announcing the rejection of its application, housing authority Executive Director Jaclyn Vinson said at this time, the organization remains committed to providing affordable-housing options to people in Danville and Vermilion County.

She said state officials did not disclose why the application was not approved.

"We will request a technical review of the application to learn what hindered this submission and how we might strengthen the application moving forward," she said.

Some residents and rental property owners, especially in the downtown area, objected to the plan, arguing that Danville already has plenty of affordable housing and this project would increase the "density" of low-income residents in the downtown area.

But Vinson said Danville has a lack of affordable housing that's of good quality and also well managed.

The proposed 70 units would not have been under the purview of the U.S. Department of Housing and Urban Development and would not have been managed by existing landlords. Rather, an independent nonprofit organization with its own board (mostly the same people who serve on the housing authority board) would have controlled them and could set its own rules and regulations.

Vinson emphasized that the project would not have been a "Fair Oaks 2.0," referring to the public housing complex on the city's east side where plans are in motion to demolish two buildings later this year. In that complex, density is an issue, as well as a lack of services within walking distance of the aging, outdated units.

The majority of residents living in the buildings slated for demolition have chosen to accept vouchers that allow them to move to HUD housing anywhere outside the community.

Vinson said the tax-credit housing proposal in "no way related" to the demolition of Fair Oaks buildings and will have "no impact" on that project.

Despite the reject from the state agnecy, Vinson said the housing authority looks forward to working with its local partners and other community stakeholders to determine how to facilitate the development of quality affordable housing options moving forward.

"While we don't have a plan as to what happens next, we remain committed to our mission of improving the quality of affordable housing in Vermilion County," she said.