The company chosen to redevelop the King Alfred Leisure Centre on Hove seafront has been put on two months’ notice.
If Crest Nicholson does not sign a “development agreement” with Brighton and Hove City Council by the end of January, officials will “explore alternative options”.
The housebuilder was due to have signed the deal in mid-2016 and the long delay has prompted calls for the site to be offered to another developer.
Council chiefs had hoped that building would be well under way by now on the five blocks of flats – up to 18 storeys high – and the 21st century leisure centre.
But talks have been mired with concerns over the viability of building a new swimming pool and leisure centre “enabled” by the money raised from building and selling 565 homes.
The council had even waived its policy of requiring 40 per cent of the homes to be classed as affordable, settling on a compromise figure of 20 per cent – or 113.
Further help came from the government which offered £15 million towards the costs of the £400 million project to speed up the building of much-needed affordable homes.
But Crest has told the council that the scheme has a funding gap of about £16 million if it is to be financially viable.
So the 20 per cent proportion of affordable homes looks like being a maximum – and an unlikely target at that.
The rising price of building materials and labour when house prices rises have slowed down markedly have undermined earlier assessments of the scheme’s viability.
Even if a deal is agreed by the end of January, the new leisure centre and first flats will not be completed until 2024 and the overall project will not be finished in 2025 or 2026.
Valerie Paynter, of Save Hove, a trenchant opponent of an earlier King Alfred scheme, said: “Both Crest Nicholson (with the Starr Trust) and Brighton and Hove City Council officers must collectively surely all be on tranquillizers by now or ready to take to the bottle to steady nerves.”
She described the latest update as “high-intensity stuff”, adding that it was “a lesson in what it takes to put a development together financially, to ride the political and economic waves while gambling with mega-millions that you can get it done and sold and move on with profit instead of ruin”.
She said: “We learned from the Karis attempt that viability was marginal. And in the end it was probably not do-able and why they lost backers ING and were unable to use their ill-gotten planning consent.
“It is with the Crest/Starr attempt too. But there is an almighty battle going on by all parties to make this one work.
“It is an heroic effort, regardless of what we think or feel or what dismay we harbour towards the enabling colossus needed in order to deliver a leisure centre … as specified.
“It may or may not squeeze through the pitfalls ahead.”
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