A decade-old state grant to build a railroad museum in west Oak Ridge needs to be used or returned to the state, city officials said Monday.

The long-awaited 5,000-square-foot Southern Appalachia Railway Museum and railroad depot could cost $1.25 million, Oak Ridge City Manager Mark Watson told City Council members during a work session Monday.

But the $480,000 Tennessee Department of Transportation grant and a $120,000 match from the Community Reuse Organization of East Tennessee would only cover half the cost, city officials said.

“It’s a big hill to climb,” Watson said.

He said the city can’t go ahead with renovations at Jackson Square, Oak Ridge’s original commercial center, until officials resolve what to do with the museum grant. However, returning the museum grant funding will not jeopardize the recently announced $800,000 state grant for Jackson Square, Watson said.

Earlier this year, SARM members reportedly approved a new design and place for the museum, moving it from just off state Highway 58 to a tract just inside the old K-25 site.

“With that relocation, the design for the museum would be changed from a Victorian-era depot to a 1940s-style train station that will mesh with plans for a K-25 historical area,” the Knoxville News Sentinel reported.

K-25 is a former uranium-enrichment plant being converted into a massive industrial park.

On Monday, Watson said the railroad museum project can’t be scaled back to make it less expensive because the grant was competitively awarded, and this one can’t be changed now.

Watson said the railway museum grant is the oldest pending grant in Tennessee.

Oak Ridge City Council will consider what to do next during its 7 p.m. Aug. 13 meeting in the Municipal Building Courtroom. The city was reportedly the grant applicant, although no city money was involved.

Charles Polling, past president of the nonprofit SARM, declined comment Tuesday, saying he wan’t ready to answer questions.

He said volunteers are still working to getting the project completed.

Scott Lindsey, the current SARM president, was not available for comment early Tuesday afternoon. CROET President Lawrence Young and Oak Ridge officials were also not available for comment early Tuesday afternoon.