The province has backed out of a deal with the city and Mohawk College that would have seen a downtown high rise with affordable and social housing.

The previous Liberals planned to sell 8.5 hectares on West 5th to the city, which would sell it to Mohawk College. The proceeds would help pay for a development at 191 York Blvd., 20 per cent of which would be affordable housing.

But a new report to city councillors, obtained by CBC, says the province has backed out of the land deal and the high rise.

The Ministry of Municipal Affairs and Housing wrote the city on Sept. 28 saying it was axing its contribution to the York Boulevard project, the report says. That includes selling the mountain brow land.

"At this time, the province has not indicated its plan for the disposition of the residual lands," said a report from Jason Thorne, general manager of planning and economic development.

Mohawk College planned to spend $9 million to restore Century Manor, a heritage building on the mountain brow land. The college says it still wants to do that. (Samantha Craggs/CBC)

It's a blow to renters and the city, which wanted the mixed-use tower. The city still plans to build the project, which includes a smaller second building. But this has "set it back years," said Coun. Chad Collins.

Infrastructure Ontario planned to sell the mountain brow to the city, which would sell it to Mohawk for $9.51 million. The property was once farmed by psychiatric hospital patients.

Jason Farr, Ward 2 councillor, called the move "heartless."

"Nothing has angered me more than this since day one as councillor," he said. The city has a housing crisis, and a project to help ease it has "turned to dust."

There are currently 6,800 households on the social housing wait list, said Collins. He's president of CityHousing Hamilton, which is part of the project.

Also at stake is Century Manor, a heritage building that's long been a favourite of ghost hunters and heritage lovers. The college also planned to spend $9 million restoring it.

The $9.51 million was a portion of the $15 million the previous government committed to the project. Community Living Hamilton, which is in the current one-storey building on the site, would get space in the new building.

Mohawk still wants to buy the land, president Ron McKerlie said in a letter to the city Wednesday.

Community Living Hamilton is in the current York Boulevard building. (Samantha Craggs/CBC)

The plan was three years in the works. In May, then-MPP Ted McMeekin said it was locked in, regardless of the election outcome.

"It's done," he said then. "It's been through treasury board. It's approved. The money's in place. It's going to happen."

Collins said this is the second time the new PC government has withdrawn or cancelled affordable housing money.

"Coupled with the cancellation of the green energy funding, we've lost millions of dollars in affordable housing funds," he said. And there's "no indication of how the new government plans to support local housing providers."

CBC News is seeking comment from the province.