The developer Crest Nicholson has pulled out of the £228 million project to redevelop the King Alfred Leisure Centre on Hove seafront.
The housebuilder was picked to build a new swimming pool and sports centre and 565 new homes by Brighton and Hove City Council more than three years ago.
Today the council said: “Developer Crest Nicholson has reluctantly taken the decision to withdraw from the King Alfred development in Hove.
“The council has been working with Crest Nicholson Regeneration since 2016 when it won the bid to redevelop the 1.8 hectare King Alfred site.
“Plans include replacing the ageing King Alfred Leisure Centre with improved, extended and modern sports facilities and building much-needed new housing, including affordable new homes.”
Crest Nicholson’s interim chief executive Chris Tinker said: “It is with disappointment that Crest Nicholson has taken the difficult decision to withdraw from the King Alfred development in Hove.
“Crest has worked with the council, the Starr Trust and other stakeholders for over three years with a view to creating a high-quality viable and deliverable scheme but has reluctantly come to the conclusion that the ambition of the scheme in these uncertain times is too great and that the project is simply unable to deliver the required social and physical outputs given the related costs and values.
“The scheme has presented a series of challenges over the promotion period and, while we would pay tribute to the council and its advisers in working collaboratively with our own team to overcome such obstacles, it has become a more complicated project than originally envisaged in terms of both planning and delivery.
“It is now increasingly apparent that the growing cost of delivering the scheme, including the council’s new £50 million leisure centre, at a time when uncertainty has been increasing and values falling, means that the project is no longer able to support the provision of any affordable housing and remain viable.
“This position, despite significant funding pledges from both the council and Homes England, is unlikely to change and the board has therefore reluctantly decided that it is not willing to promote and deliver a development of this scale and nature.
“All stakeholders have been made aware and we will continue to work with all partners to ensure a smooth transition.”
A total of £23 million of public money – £15 million from the Housing Infrastructure Fund (HIF) and £8 million from the council – was approved to assist the developer and facilitate the building of a new sports centre and 565 homes on the seafront site.
The Labour council leader Nancy Platts said: “I’d like to thank everyone who has tried so hard for so long to make this project a success.
“Of course we are hugely disappointed that Crest Nicholson has confirmed it won’t be progressing the redevelopment of the King Alfred site.
“We’ve worked closely with their team to find a financially viable scheme to deliver a new public sports and leisure facility and provide affordable housing.
“We appreciate the difficulties and complexities of the project and appreciate too the efforts made by Crest Nicholson but the council makes no apologies for pressing the developer to deliver the scheme it selected in 2016.
“Finding a viable alternative will be our upmost priority and this will include consulting with the local community who have been so patiently awaiting this development.
“Our objective has always been to provide a new sports and leisure centre as well as much needed affordable housing for Hove. We will continue to explore all ways possible to get the most we can from the site so it is of maximum benefit to local people.”
The council has already begun exploring alternative delivery options, as agreed by councillors earlier in the year, and an update on the next steps for the King Alfred project will be presented to the Policy and Resources Committee in the autumn.
Conservative councillor Robert Nemeth said: “I have highlighted a catalogue of failures by the Labour administration from the outset and predicted exactly that this would happen over two years ago.
“By allowing Crest Nicholson to keep the city on the line for so long, without taking any sort of deposit or fee, the city has lost millions.
“There should be resignations over this.
“On a personal note, I feel for Rob Starr who has put so much into trying to make Crest and the council see sense.”