BOURNEMOUTH council will go back to the drawing board on its BIC hotel plan following a legal challenge, with its credibility over the £70m project firmly on the line.

Until yesterday’s cabinet meeting, the borough panned to borrow some £70 million from the Public Works Loan Board to fund construction of a hotel on the former Winterbourne Hotel site, next to the BIC, with developer Mill Lane Estates selected as preferred bidder.

Councillors have now voted to drop Mill Lane, despite apparently making “very good progress” with the firm, and reopen the procurement.

The lack of tendering to the wider market was one of the criticisms in a legal challenge launched by Peel Hotels and Bespoke Hotels last month.

However, at the meeting members also voted to “reconsider the best model to deliver the council’s objectives”, which could mean abandoning the current borrowing and funding plans, which have also been criticised by the legal letter and by industry insiders.

Cllr Philip Broadhead, cabinet member for economic growth, told the Echo: “The procurement always gave the option of the council being the funder as an option, not a requirement. I imagine that would stay the same.”

It is not clear why the council has taken this decision.

At the meeting Cllr Broadhead said “substantial progress” had been made with Mill Lane “in the last week alone”, said the council was confident claims in the legal challenge were “spurious” and “an attempt to undermine the project”, and expressed regret over the delay.

Council leader John Beesley said the process had thus far involved “a huge amount of work” and he was “disappointed” in the reversal.

When questioned by the Echo Cllr Broadhead said: “If people want to criticise the process, and say we haven’t given them the opportunity, this is us saying, if you are so concerned here is your opportunity.

“It is not to do with worry over the legal challenge. It is not to do with worry over the current project.

“It is about moving forward positively, and engaging with people.”

At the meeting, he acknowledged that the legal action contained a claim that the council had been “unfair” in not tendering the contract to the wider market, and said the council could “dismiss the legal objections to the procurement by having a fresh procurement exercise, enabling those parties who claim to be transparent in their intentions to bid”.

Cllr Mike Greene, cabinet member for transport and waste, was more scathing about those criticising the project.

“I will be very interested to see which of the objectors and mutterers will take advantage of this second opportunity to get involved,” he said at the meeting.

“I am disappointed there is a delay, but I am pleased we are going to find out whether those seeking to frustrate this to the cost of the town or council tax payers will put up or shut up.”

Speaking to the Echo, Cllr Broadhead said he “hoped and expected” Mill Lane would submit a new bid for the site.

At the meeting he said the firm had been close to providing a 10 year rental insurance guarantee for the scheme, one of the key conditions attached to the contract, which the hotels’ legal claim had suggested was unfeasible.

He said: “Having that rental insurance policy in place is I think for most members and for me in particular a key part of the bid, and in the last week alone substantial progress was made on that. We had an insurance policy on the table.”

Despite these comments, after the meeting yesterday Mill Lane Estates director Glenn Mills said he had not been aware the meeting or the decision was taking place. He declined to comment at this stage.

The council only announced its rethink on Wednesday evening via a press statement, and at the meeting yesterday morning Cllr Beesley thanked officers for preparing a report so quickly.

Mill Lane has a track record of delivering projects in the hotel and leisure sectors, but was also involved with a planned Hilton hotel at Leeds Arena, which was left unfinished after other companies involved became insolvent.

Last month Cllr Don McQueen, former chairman of the corporate services scrutiny panel, said his committee had “asked some serious questions” of the “experience and credibility” of the firm before approving the scheme.

Cllr McQueen was at the cabinet meeting yesterday. He urged members to not “dwell on where we have got to at this point”.

“It deserves a really careful review of all the development options for it, of which a hotel is certainly one,” he said.

“Look at the potential for even residential.”