Walter Pasciak, 84, was so eager to move to a proposed $180 million waterfront retirement community for veterans in eastern Baltimore County that he paid $5,000 to be given "priority consideration" on the waiting list.

"The location is great, and all the facilities would have been there," said Pasciak, a World War II veteran.

Now he doesn't know whether he'll see the money again.

On Thursday, the Department of Veterans Affairs terminated its contract with Federal Development LLC, a Washington-based company that had been selected to redevelop Fort Howard Hospital and other buildings at the one-time Army base on the North Point peninsula.

"We saw no progress," said Edward Bradley, director of the Office of Asset Enterprise Management for the VA.

The company broke ground three years ago on the 95-acre site, intending to build about 1,300 homes, but not a shovelful of earth has been turned since.

About 1,500 veterans reserved spots in Bayside at Fort Howard, and more than 100 placed deposits of $500 to $5,000, according to the company.

William J. Pearson, 67, a Vietnam veteran who lives in Fells Point, put down $750 two years ago. "The VA said this was a good thing, and top government officials were promoting it," he said. "It made me feel comfortable investing in it."

He has been trying for a year to recover his money.

Evelyn C. Orsini, a 77-year-old Delmar resident and Air Force veteran, envisioned a home overlooking the Patapsco River, closer to her family and friends in Baltimore, and paid a $500 deposit.

"I was so hopeful at first, but now the more I go, the more forlorn it looks," she said. "I don't think it is going to happen in my lifetime."

Orsini began efforts to retrieve her money several months ago. "All my actions to contact them have been ignored," she said.

A spokeswoman said the Maryland attorney general's office has received one complaint about a deposit that was returned in a check that bounced and another about a failure to refund money.

John Infantino, CEO of Federal Development, said in an e-mail from a West Africa construction site that his company has returned $44,500 in deposits to 49 people and will refund the rest of the deposits within 30 days.

Infantino said the company spent about $7 million to design and plan the complex, but that county building requirements, the declining real estate market and VA demands, including construction of a $2 million health clinic, made the project unprofitable.

"Given today's financing marketplace, it is highly improbable that the project can be developed under the same constraints that we were faced with," he wrote from Chad.

Still, in a June 29 e-mail, Infantino told Pearson, who asked for an update, "The project is still moving ahead."

The VA selected Federal Development three years ago after a competitive bidding process. It offered "the best overall proposal with the best value to the VA," Bradley said.

The plan involved converting the hospital and several military buildings into apartment-style homes and building new residences as well as a nursing home, a museum, a marina and shops.

Infantino's business plan, which he said had VA approval, was based on starting construction without county permits and receiving an exemption from local taxes on the federally owned property. In 2008, the state attorney general's office said that the property would be taxable and Baltimore County insisted that Infantino abide by its development regulations.

Baltimore County officials met with Infantino on several occasions.

"We offered to help with the development process," said county spokesman Don Mohler. "The developer refused to work with the county."

Bradley said the VA remains committed to the project and will seek new bids in the spring.

The VA is writing to all of the depositors and offering to assist in recouping their money. Anyone experiencing difficulty should call 1-202-461-7778.

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