The collapse of The Quarter development will be the subject of behind closed doors debate at the next Wodonga Council meeting.
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The $40 million-plus project, involving the construction of a five-storey residential and commercial building, was shelved by the Criterion Property Group on Thursday, June 27.
The decision followed work being stalled at the former court and police station site and council giving support for a 12-month extension, sought by Criterion, to a planning agreement which set down a deadline for the project to be completed.
Wodonga mayor Ron Mildren said that appeal had triggered concerns.
"It was a shock in a way because what it did was highlight that the progress of things were not being concluded smoothly, it showed there were some difficulties and it raised the alarm if you like," Cr Mildren said.
He said confirmation the development then would not proceed was "disappointing but probably not unexpected".
"I understand there will be a report for the council meeting coming up and we'll have to deal with whatever things come out of that," Cr Mildren said.
It is anticipated those conversations will be held in a confidential session due to commercial reasons and recommendations for action will be put.
They are expected to relate to what will now happen with contractual obligations which were set down when the council sold the CBD West site to Criterion in early 2020 after the company's offer was accepted in late 2019.
That document set out requirements for works to be completed on the land, which has been mostly parkland since the demolition of police and justice buildings in the early 2000s.
While Criterion won approval from the council to have a relevant section 173 planning agreement extended by 12 months, a formal alteration was yet to be signed off by the city and the company at the time of The Quarter's abandonment.
Cr Mildren said it was inevitable there would be frustration with the termination of the project, which comes amid ongoing uncertainty about the development of Junction Place, a nearby chunk of land also subject to renewal plans.
However, he objected to the two being bracketed together, noting Development Victoria control of the former railway land.
"I wouldn't compare the two, I don't think they've got many similarities, I think they're quite different," Cr Mildren said.
"One was brought to us by developers and contractual obligations were entered into, the other one is state government-driven with different objectives and different influences."
Business Wodonga chief executive Graham Jenkin said the failure of The Quarter and lack of progress with Junction Place was "leaving a gap" in the Wodonga CBD.
"I think Development Victoria is letting Wodonga down by not saying where they're going with Junction Place," Mr Jenkin said.
"By now they were meant to be letting us know who the prospective tenants are, but we're still waiting and even the community reference group doesn't seem to know what's going on."
Mr Jenkin hopes the CBD West site doesn't remain idle for long.
"I just would like to see some action and hopefully Criterion come up with an alternative or quickly sell the land to someone who can develop it," he said.
A related plan for a $60 million, 103-bed private hospital on land south of The Quarter residential development has also been abandoned by Criterion after it was deemed not viable.
Announced in April 2023, it would have seen a four-storey building constructed on land once occupied by Wodonga swimming pool.
At the time Criterion director John Mooney said it would be "a world-class facility where people can go for post-operative care".
"We believe it will deliver significant benefits to the local community in any number of different ways including creating up to 250 new jobs once fully operational," he said.
