public funds should never be spent on private purposes.
Some argue that the economic potential of a given project is worthy of public fund investment. Whether that's true or not is not my interest.
As the mayor, (or whatever public official) I would lease the (at least the land) project to the private developers, and lock in future revenues (or their foreclosure) from the privateers. Public contribution would be recovered first, as part of the lease agreement, and default would favor the public inasmuch as title to the entire project is yielded in case of a default.