A top official with Artspace USA said this week that missing out on $750,000 in state funding “is not the end” of a multi-million plan to transform the Hamilton Center building downtown into studios and apartments for creative artists.

Greg Handberg, senior vice president of properties for the Minneapolis, Minn.-based developer Artspace USA, visited Hamilton Wednesday to lecture at Miami University Hamilton and meet with local partners, including the city, of the $10.5 million venture.

Handberg said he was “disappointed” that the Ohio Housing Financing Agency rejected the partnership’s application for a combination loan and grant for housing development for the second consecutive year. He called it a “setback” but assured that the project is “moving forward.”

“It’s a setback because we have all but $750,000 secured to fund the project,” Handberg said. “This (denial) does nothing at all for not doing the project. It will take some more time.”

The Artspace project seeks to take the Hamilton Center building, located in the 200 block of High Street, and convert it into a mixed-use facility with 42 apartments with studios for creative artists to live and work in, as well as, 3,000 square feet of commercial and gallery space on the ground floor. City officials hope to break ground in April and complete the project a year later.

City officials learned last month that OHFA had denied funding for the project for the second time in two years.

OHFA, which facilitates the development, rehabilitation and financing of low- to moderate-income housing, denied the tax credits last year, suggesting the project’s costs needed to be reduced. This year, OHFA provided funding for four development projects with Hamilton’s Artspace project coming in fifth.

Handberg said he thought their application was “a good one” and he expects a new application for tax credits to be submitted to the agency in February.

“I feel confident and we’re committed to this project,” he said. “It’s going to take some tenacity.”

Hamilton City Councilman Timothy Naab, who has championed the project, said the partnership is seeking other sources of funding. He stressed that “there won’t be any general fund money appropriated for this project from the city.”

Naab has also said that whatever funding is needed after other sources have been secured would have to obtain the balance from a lending institution.

To keep the project moving forward, City Council approved the transfer of $357,614 of federal HOME Investment Partnership Program funding. In 2011, council transferred $466,000 of HOME funds for the project.

Once the upfront funding has been secured, the Artspace organization would take title to the property and would be responsible for the debt service for any loans received as well as the upkeep and management of the planned mixed-use building.

Local architect Michael Dingeldein said the property sale is expected to close in the next three to four weeks. He also said the metal framing on the facade of the building, affectionately known as “the radiator grill,” would be coming down shortly after the closing in January.