Dreams of Sydney’s inner west becoming the creative arts capital of Australia could be shattered after the developer who proposed the plan, angry at delays in the approval process, threatened to withdraw it.

The warning has set the Inner West Council scrambling to try to salvage the five-year-old proposal to build a 500-artist hub on the Marrickville site of an old timber storage yard by now speeding up the system as much as the law allows.

But the company Danias Holdings, which owns the land, is meeting this week to decide whether to jettison the scheme, put the site back into industrial use or sell it off to the highest bidder, and find somewhere else for an artists’ centre instead.

“This is the most exciting project in Australia right now, the largest creative and arts hub in the country,” says Danias general manager Angelo Angelopoulos.

“[But] it appears it might be too hard for council to support a project that will put Marrickville on the map at an international level. The Danias group is diverse, we will expand our timber and building operations to the Rich Street site and just look for another site around the Sydney fringes to build what we have proposed in another location.”

The $50 million proposal for the recently rezoned site on Rich Street, by the Factory Theatre, involves constructing a new precinct of three new buildings offering 13,000 square metres of working space for artists and creatives from the digital, TV and video industries. There would also be cafes and a park at the centre.

It’s been backwards and forwards for five years now but at a council meeting last week, councillors voted to put the plan back on formal public exhibition, and to review the results after the minimum 28 days.

A council spokesman said: “During this time, the developer contribution and VPA process will also be progressed.” There had been 23 letters of support received for the development application and two objections.

Inner West mayor councillor Darcy Byrne said delays in reaching a decision about the development application had been caused firstly by the rezoning of the larger Victoria Road Precinct containing the proposed hub, mostly for business use as well as 1100 new homes by 2036. The second issue had been the confusion produced by the amalgamation of councils.

“I’m hopeful that we can proceed at a faster pace after the 28 days,” he says. “Having waited half a decade to get to this stage, we are hopeful too that they won’t withdraw out of frustration at the delays.

“The proposal is a very exciting one and we can’t afford to let it fall off the agenda, even though the context has been a very long and tortured one. We want the inner west to be the artistic and cultural capital of Australia with so many commercially successful creative industries. We are working to expedite the process.”

That may still not be enough to keep the proposal afloat, however. Sean Macken, a planning consultant for the developer, says that still leaves the creative arts hub in limbo for another few months, or possibly many more.

“This could be the further delay which may kill it off,” he says. “Council could approve the hub now without the Development Control Plan or the Voluntary Planning Agreement if they wanted to. We’ve provided them with legal advice to this effect and, while they verbally agree with us, they still insist on taking the long and slow process of waiting more.

“After six months of consideration, council still can’t give us a timeframe for approval, or even if an approval is possible. Under their process it will at least be several more months and could possibly run into next year. The uncertainty is killing the project, and we are meeting this week to see if we are going to abandon it or keep limping on.”

The rezoning was gazetted last year, and necessary adjustments were made to the proposal, and everyone is now working hard to push it forward, says councillor Victor Macri. He says he hasn’t been happy with how long the process has taken but he feels they’re now back on track.

“I’m very keen on the creative hub going ahead,” he says. “I think it’s going to be great for Marrickville, which has been in serious need of revitalisation, and a boon for the whole area. How much better could that be?

“This has been five years in the making, and every step of the way it’s been met with resistance from [council] staff. But they haven’t grasped the bigger picture and seen the vision. This will be a great community area for everyone, and it’s vital it goes ahead.”