Denver Auditor Dennis Gallagher changed his mind Wednesday about approving a $3 million city contract with Seedco Financial Services.

But he said that he will be monitoring how the contract is fulfilled.

"I do not raise these concerns lightly and indeed, I hope that my concerns are unfounded," he wrote in a letter to Jacky Morales-Ferrand, director of Housing and Neighborhood Development, dated Wednesday.

Earlier this week, Gallagher had refused to approve the contract with Seedco Financial Services, a nonprofit organization, to oversee a loan program to help small businesses, commercial and mixed-use projects in targeted areas.

He had questions about a possible conflict of interest on the part of Peter Chapman, who had advocated for the creation of the program while he was an adviser to Mayor John Hickenlooper.

Chapman resigned from the city in May to become Seedco Denver's executive director.

Gallagher also had concerns about the $455,000 in overhead costs that the program would have over a six-month period.

In his letter Wednesday, he reiterated those concerns. "Every dollar spent on overhead is a dollar that cannot be loaned," he wrote.

Still, Gallagher said he had no legal reason to withhold his signature, "and I am reluctantly forced to sign this agreement."