Londonderry's urban regeneration company Ilex looks set to lose responsibility for one of its two flagship projects in the city.
The Department for Social Development has confirmed that it is now considering taking over the project management role for the Fort George former Army base site.
The shock announcement is a hammer blow for Ilex, set up by the DSD and the Office of the First and Deputy First Minister in 2003 to oversee the regeneration of Derry.
Fort George was acquired by the DSD in 2004 and Ilex was tasked to take over its maintenance and regeneration the following year.
To date, IIex has delivered the redevelopment of the Ebrington parade ground and the city’s Peace Bridge, and was also part of the team which secured the UK City of Culture accolade and drew together the city’s One Plan.
However, there has been no physical development at the 14-acre Fort George site to date.
Ilex launched a masterplan for the site in 2007.
Its planning application for a £200m development to include residential, office, leisure, light industrial facilities, retail outlets, cafes, bars and a restaurant is still live, with a decision expected by Christmas.
The plans for Fort George and Ebrington this week came under fire after a study by think tank the Academy of Urbanism.
The Academy panel conducted a detailed study of Derry and found that plans for both areas needed to be radically altered if not changed completely to ensure economic success.
It claimed that Fort George would be better suited as a mainly residential development rather than a business hub.
A DSD spokeswoman said that the current plans for Fort George would not be changed.
She said: “The relationship between Ilex and DSD is a partnership. The department’s role in this partnership has been to assist the regeneration of Fort George by using its legal powers, its budget and its track record in regeneration to help implement the plan.
“The delivery of the One Plan produced by Ilex is a key commitment in the Executive’s Programme for Government.
“Ilex and the department are working very closely together to achieve this as well as taking full advantage of the opportunities which will be presented by the UK City of Culture in 2013.
“The department’s primary objective within this is to ensure that the full potential of the Fort George site for Londonderry and the wider North West region is realised. As part of this, the department is considering taking on the project management role for Fort George which is currently carried out by Ilex.
“However, none of the changes that are being considered will have any impact on the specific projects planned for the site.
“The minister is keen to ensure that the combined resources of DSD and Ilex are used in a way that will ensure that all this work in Londonderry is moved forward effectively and builds on the successes of Ilex to date.”
The report, and the DSD announcement, are the latest in a series of headaches for Ilex.
The roles of chair and chief executive have each changed hands at least four times since the company was set up. Current chief executive Aideen McGinley announced in July that she is to leave ahead of the UK City of Culture year to take up a position of BBC Trustee Ireland by November.
Earlier this year, the Ilex boss apologised before the Public Accounts Committee at Stormont after auditors confirmed the company had overspent £400,000 without approval.
Ilex last night declined to comment on the DSD position.
Fort George occupies 14 acres of flatlands along the Strand Road on the outskirts of the city centre. It has a 300m waterfront overlooking the River Foyle with a refurbished Second World War jetty. From the 1830s until 1924 the site was a shipyard but closed during the Depression. From 1941 to 1945 it served as the ship repair yard for Allied vessels. In the 1970s the former shipyard became an Army base and was known as Fort George. It was closed in 2001.