A state official has decided to halt the award of a bid to administer nearly $20 million in federal affordable-housing funds and rebid the project, saying the process has been unfair.

Palmer DePaulis, executive director of Utah's Department of Community and Culture, overruled his subordinate, Gordon Walker, in deciding to reopen bidding.

"I found that it has not provided fair and equitable treatment for potential bidders," DePaulis said in an e-mail sent Thursday to the State Purchasing Division and shared with affordable-housing advocates.

Those advocates had hoped to be part of a collaborative effort to battle foreclosures and associated homelessness with the federal neighborhood stabilization funds. They were surprised and angered when they learned bidding to administer the project had already been closed.

Walker, director of Utah's Division of Housing and Community Development, reluctantly launched the Request for Proposals (RFP) earlier this month at DePaulis's request.

Walker had hoped, instead, to form a nonprofit that could be governed by members of the Olene Walker Housing board. He blamed DePaulis's RFP mandate for delaying allocation of the money,

Just two groups responded to the RFP that closed May 14: St. George-based Three Point Enterprises LLC, and the Utah Center for Affordable Housing, a newly formed entity directed by Zions Bank executives Mike Plaizier and Dan Peterson.

Affordable-housing advocates -- who consider themselves key stakeholders in the use of the funds -- first learned of the bid process Wednesday, when Walker announced it as a done deal.

DePaulis said in his memo that he had halted the award of the bid and ordered an expedited rebidding "given the intense negative reaction about the notification process from the very stakeholders that this RFP was intended to address."

"I think this is the right thing to do," DePaulis said in an interview.

He would not discuss the apparent friction between him and Walker.

Reached on his cell phone Friday, Walker declined comment.

DePaulis' action drew immediate praise from Tara Rollins, who heads up the nonprofit Utah Housing Coalition.

"It was a good choice to reissue the RFP," Rollins said, "because the people that were in [Wednesday's] meeting are those responsible for the number of affordable housing units in their communities."

Darin Brush, a coalition member and chief executive of the Community Development Corporation, scrambled Friday to begin pulling together a proposal that would address the needs in Utah's most populous counties: Davis, Salt Lake, Utah, Washington and Weber.

"My hope is that we can apply as a consortium of partners," Brush said. "We're having some discussions right now about how we can put forth an application that meets the program goals and covers the five counties."

DePaulis said he hopes the expedited rebid will take about two weeks.

Delays in spending Utah's $19.6 million allocation may have put the state behind others and, some feared, could hamper its ability to secure funds in the more competitive second phase of the program. The deadline to apply for that round of funding is July 17.

"The first round of NSP funding is beginning to be spent by our grantees," said Brian Sullivan, spokesman for the U.S. Department of Housing and Urban Development.

"Based on our review of 309 NSP plans, most intend to purchase foreclosed properties, rehabilitate them and then resell them to low-to-middle income families."

The funds are also being used for "land banking," Sullivan said, where foreclosed and abandoned properties are purchased and set aside for future use.

Dan Harrie contributed to this report.