The new Tappan Zee Bridge project took a major hit Tuesday when state officials gave up their fight for a half-billion dollars in funding.

State officials dropped their bid to borrow $511 million from the Clean Water State Revolving Fund after objections from the Environmental Protection Agency and environmental group Riverkeeper.

The group argued over the past year that the federal fund was reserved for financing clean water and sewer projects, not paying for a new bridge. Riverkeeper says it fiercely fought against the loan because it felt the money would be improperly used.

Instead, the state settled for about $31 million in addition to $1.2 million for an oyster bed restoration project and about $100,000 for the relocation of a falcon nest box.

The agreement is now raising concerns and questions about how the state will make up the roughly $480 million deficit in funds.

Acting Executive Director of the New York State Thruway Authority Robert Megna released a statement saying, "The environmental measures that are included in the NY bridge project will proceed as planned and we remain committed to building the new bridge in an environmentally responsible manner."

A meeting was held Tuesday night at Washington Irving Middle School in Tarrytown to give the community an update on the project.

State officials say they have completed 96 percent of the design for the $3.9 billion project. They say 38 percent of construction along the span has also been completed.

Despite no real answers being provided on the source of the remaining funds, homeowners who attended the meeting say they remain optimistic about the project.

Another meeting will be held at Nyack High School Thursday to further discuss the project.