THE death knell has not sounded over plans to transform the defunct Darlington Arts Centre into a thriving commercial and cultural hub, despite it losing out on £2m of funding.

Businessmen Andy Bottomley and Graham Thrower applied for a £2m Arts Council England capital grant to kick-start their ambitious Project Vane to redevelop the dormant Vane Terrace building into a hotel, restaurant and community arts venue.

The council-owned building has been empty since budget cuts forced its closure last July and Mr Thrower said that although it was a blow to not win the Arts Council’s backing, the scheme was not dependent on the grant.

He said: “The Arts Council money was public sector money and only a small minority of the overall amount that was going to make this project happen.

“The vast majority was coming from private sector investors, but the Arts Council was an important element; a catalyst to help get the investors on board and to send out a signal that the Arts Council supported our plans.

“That is not to say that the development on the site won’t now go ahead, we don’t know at this stage, but we have had a number of very, very encouraging discussions with a number of investors and partners, and, interestingly since today we’ve had a couple of calls from other organisations that might like to help us in terms of funding.”

Mr Thrower, who thanked Darlington Council and MP Jenny Chapman for supporting the project, said that all involved would now take some time to consider how missing out on the funding affected the wider plan.

An Arts Council spokesman told The Northern Echo that there were limited funds available in the large scale capital programme and that after a “thorough assessment” of Project Vane, it was decided there were other stronger applications.

He added that the Arts Council was continuing to explore other options for the project with the applicant.

Darlington Council leader Bill Dixon who has backed the scheme from the start, said that its supporters were “bitterly disappointed” with the Arts Council’s decision.

He added: “Project Vane's funding application was based on three quarters private sector funding, plus Arts Council funding; the project needs no ongoing public sector subsidy and is the type of innovative scheme encouraged by the Arts Council as a potential future model for the arts.

“It is therefore puzzling to learn that the bid has been unsuccessful.”

Mr Dixon said that the council will continue to work with Project Vane and that the building remains under council ownership.

John Dean, chair of Darlington for Culture which now promotes local arts after initially forming in 2010 to try and save the council-run Arts Centre, said the group also wishes to continue the drive to create a venue that will “benefit the town and its residents both culturally and economically.”