After meeting in a closed session Thursday, the city authority's board rejected a request by the County Commissioners that the city agency's five-member board be increased to seven members, with two to be appointed by the county.
All five members are now appointed by the mayor of Hagerstown.
The city authority's lawyer, M. Lynn Williams, sent a letter Thursday to Del. John P. Donoghue, D-Wash., asking him to suspend efforts to write legislation to combine the authorities.
County Commissioners Ronald L. Bowers and James R. Wade said the city authority's decision to reject county representation on the board probably means any deal is dead.
But Commissioner R. Lee Downey said it would be foolish for the county to turn down $100,000 to $150,000 in annual savings.
County officials estimated Wednesday that a merger could save the county about $140,000 a year. The county would save money because the city agency would take over administration and maintenance of the county's housing units.
Downey said he'd be happy to have a nonvoting county representative on the board because the county authority manages only about one-tenth the number of housing units as the city.
"I'm still willing to take a look at it," said Commissioners President Gregory I. Snook.
"I don't think the whole deal is dead. We might go a different direction with a partial merger," Commissioner John S. Shank said. "I'm still open to discussion."
Hagerstown Housing Authority Chairwoman Carolyn W. Brooks faxed a letter to Snook Thursday criticizing what she called the commissioners' "political intermeddling" in the city authority's affairs.
"Our board was quite taken aback that the Board of County Commissioners would presume to dictate our (board's) structure and composition," Brooks wrote.
"Quite frankly, we are offended at the suggestion that we are opposed to County representation on our board. What we are opposed to is political interference," she wrote.
"To suggest that we ... are incapable of setting policy for the Authority without commissioners being appointed by the County Commissioners is an insult."
Brooks left open the possibility that the takeover could take place if the commissioners dropped their demands.
Snook characterized the idea of having two of seven members appointed by the commissioners as a request, not a demand.
Wade objected to the tone of Brooks' letter.
"I don't call it political meddling. We just want fair representation," he said.
"Nobody should be insulted because I suggest that somebody in Hancock have representation on the board. What's wrong with representation? That's kind of how we built this country, I thought," he said.
"As far as I'm concerned, it's over," Bowers said.
He said he had received 11 calls from senior citizens Thursday asking that the county not move forward on the deal.
Bowers said the county authority probably could become self-sufficient without a merger.
The county has 88 housing units for senior citizens in Smithsburg, Boonsboro and Williamsport and 25 houses scattered throughout the county for families.
The city housing authority is much larger, with 1,180 public housing units, including Walnut Towers and Potomac Towers.