ASTORIA (AP) — Astoria and Newport have hit a snag in their quest to bring passenger air service to Portland back to the coast.

Oregon Department of Aviation Director Dan Clem put a hold on the tentative deal the parties struck last month. Newport and the Port of Astoria will talk again today to reconsider weaving an air service contract from a snarl of terms and conditions.

North Bend-Coos Bay continue to have Oregon’s only scheduled coastal passenger air service.

The Port of Astoria and the city had tentatively agreed to contract with SeaPort Airlines and Kenmore Air, but only if part of the $3.6 million in ConnectOregon II grant funds for the project or the $900,000 in matching money could be used to also extend service to Seattle.

But Clem sent word Friday that none of the ConnectOregonII money can be used for service to Seattle. Port leaders want to contract with SeaPort regardless of a Seattle connection.

Newport, which had initially favored a competing proposal from Cape Air of Massachusetts only agreed to go with SeaPort if Seattle were part of the deal.

Clem said a projected air service start date in 2010 is too late to be considered for funding through the transportation enhancement program ConnectOregonII.

Cape Air has said it cannot launch service to the coast until the middle of 2010.

The Port of Astoria and the city have struggled to piece an air service plan together since they were awarded state funds in June.

Their first request for proposals was stymied by SeaPort Air, which claimed it had been left out of the bidding process. In their second request for proposals, the port and the city received two responses. One was the joint proposal from SeaPort and Kenmore Air. The other was from Cape Air of Massachusetts, which had also responded to the first request.

But Cape Air, Newport’s top pick, is apparently ineligible because of start date problems.

“We have two options,” said Port Director Jack Crider. “One is to select SeaPort as the only viable candidate, and the other is to say, ‘None of this works,’ and forget the whole thing,” which Crider opposes but which has been suggested by Newport city attorney Gary Firestone.