THE redevelopment of the former Rothesay Academy site for housing could be under threat as a result of budget cuts.
The Chapelhill site, between Academy Road and Westlands Road, was acquired last year by Rothesay-based housing association Fyne Homes, who proposed a development of 89 homes on the site.
But a combination of the economic downturn and a decision by the Scottish Government to cut the budgets of many of the country's housing associations have put the project in jeopardy.
And while it is hoped work on the upper part of the site, adjoining Westlands Road, might be started during the 2009-10 financial year, the future of the lower site - including the B-listed main building, which was opened in 1958 but quickly became a maintenance headache - is a good deal more uncertain.
Fyne Homes' new business director Peter McDonald said: "The Scottish Government has brought forward 100 million in accelerated housing investment, and we made a bid for a chunk of that to support our acquisition of the Academy site.
"That has now received grant support, which effectively puts us in the position of trying to work up a proposal that will meet planning requirements and will also match much more rigorous requirements in terms of value for money.
"The upper Academy is in our building programme, and I would like to think that the Scottish Government would put in sufficient money to allow us to start on that part of the site in the 2009-10 financial year.
"But our budget this year is less than half of what it was last year, and in the current economic climate it's not going to be an easy project to do."
The Academy site was vacated in June 2007, when the school moved to its new shared campus home at Townhead.
The main building, on the lower half of the site, was given B listed status by Historic Scotland in November 1997, despite its structural problems - and many locals were astonished to learn that the Art Deco 1930s building on the Westlands Road site, despite being in better condition and arguably of much greater architectural merit, was not listed at all.
The lower building replaced the stunning Gothic structure which had housed the Academy's pupils since the school opened in 1870 and which was destroyed in an arson attack in 1954.
Fyne Homes chairman John Pemble warned in the organisation's last annual report that there was a risk of lower subsidy levels resulting in a cut in the number and quality of affordable housing built by the association.
Argyll and Bute MSP and enterprise minister Jim Mather said there had been a "marked improvement" in the numbers of public sector houses started in the first year of the SNP administration.
"I would not for a moment suggest that the need to address the chronic shortfall in Argyll and Bute in the demand for Social Housing – affordable homes for rent – has been in any way substantially diminished," said Mr Mather.
"That will take many years to achieve and in the present economic climate further obstacles have been put in the way of our Scottish Government in the supply of finance and the operation of the banking industry.
"Nonetheless, I am encouraged to note that the trend of housebuilding starts in Argyll & Bute and elsewhere across Scotland is rising and that has to be a welcome sign.
"In 2007/2008, the first year of the SNP Government, starts were made on 168 public sector homes in Argyll & Bute and that represents an increase of eight per cent on the figures from the previous year, the last year when the Lib/Lab Executive were in control."
Elsewhere in Rothesay, Mr McDonald told us that the association's refurbishment of a single tenement block in King Street, badly damaged by fire some years ago, is due to be completed this summer.
The redevelopment of the town's former council chambers and sheriff court, meanwhile, is on course for completion in the summer of 2010.