WAVERLEY councillors have grim decisions to take next week over their contract with Crest Nicholson Sainsbury's, as the troubled East Street developer seeks a three-year extension to allow market conditions to improve.

A stark assessment, that "in current market conditions, housing and commercial renewal schemes are virtually unfundable", will be delivered in a report to Waverley's executive by council officers.

The upshot is that no-one can forecast when building might start on the long-derelict site.

The council now has the opportunity to walk away from the contract if it wishes, but with no Plan B in place, would face years establishing a scheme with a fresh developer.

"Terminating the contract would mean, in effect, starting again at the beginning of the project, seeking an alternative development proposal, and new contract terms," warns the officers' report.

"This could entail several years of delay in meeting the council's regeneration objectives, and would result in greater uncertainty for the people of Farnham."

As things stand, the scheme needs to have met certain criteria by December 31 if the contract is to become unconditional.

But as these criteria include both assembling all the land and passing a viability test, councillors must effectively decide whether to terminate the contract on or after January 1 or grant an extension.

The executive will be advised on Monday to recommend to the full council meeting next day that an extension be approved, but of two years, and not the three requested by Crest Nicholson.

Two previous extensions - of one year and nine months - have failed to see the project off the ground.

But councillors will be told that in the current economic circumstances, it is highly unlikely that any alternative developer could be found who would match the deal with CNS.

"Waverley has already invested significant resources into this development proposal. The minimum land value due to Waverley under the contract with CNS will see this investment returned.

"In addition, the contract secures significant revenue funding to Waverley from the commercial elements of the development."

But with an eye to the possibility that the partnership with Crest Nicholson may ultimately fail, the suggestion is that Waverley takes the precaution of seeking ownership of all the plans and drawings should the contract be terminated.

"The copyright otherwise vests in the applicant, who would be entitled to withold it or demand significant fees."

At the same two meetings, councillors are being recommended to kick-start compulsory purchase proceedings relating to the former cinema site and the Marlborough Head - a process expected by officers to take up to two years.

The two properties are needed to carry out the approved scheme, and terminating the contract could harm the council's ability to persuade the Secretary of State to give the green light to compulsory purchase, councillors are warned.

But the further grim prospect for Waverley is that groups campaigning against the development have warned they are likely to engage barristers and stand shoulder-to-shoulder with the landowners in opposing the CPO.

In public questions to the council next week, Ann Thurston of East Street Action, will draw attention to the reported precarious finances of Crest Nicholson and ask who will pay the legal fees, if the costly compulsory purchase exercise fails.