Plans to build an old people’s housing complex on the site of a Birmingham hotel have been shelved after the company behind the scheme said it couldn’t afford to pay £160,000 to Birmingham City Council for planning permission.
McArthy and Stone Developments had agreed in principle to pay Section 106 planning gain money after submitting an application to demolish the Fountain Court Hotel in Edgbaston and build 38 self-contained sheltered apartments.
The cash would have been used by the council to pay for affordable housing and new public open space.
But days before councillors were due to decide, the company contacted the council to explain “in the current economic climate” it could not afford to make the Section 106 payments in advance.
Birmingham Planning Committee yesterday rejected McCarthy and Stone’s request to delay paying the money until the apartments are occupied.
Planning permission will not be granted until the firm signs a binding contract promising to hand over £160,000. Committee vice-chairman Paula Smith said the request for a delay, if approved, would “open the floodgates” for builders to avoid paying.
“There is no way we can have one law for one lot of developers and another law for the others,” Coun Smith (Lib Dem Hall Green) added.
The council admitted Section 106 agreements were at risk of being broken because of the recession. At least £13million is at risk of being withheld as property developers begin to break the agreements.