An ambitious plan to build a six-storey, 55-unit housing co-op in the heart of Osborne Village is dead.

On Wednesday Nick Kowalchuk, executive director of the Gas Station Arts Centre, said the theatre and its partners were forced to cancel the plans after failing to secure enough funding from the City of Winnipeg.

The centre is still planning to go forward with about $11 million in renovations to the building that would see a new 300-seat theatre built as well as 7,700 square feet of commercial space.

But the new plan will not include any residential units: no affordable housing, no accessible units for adults who are both deaf and blind, nor any accommodations for artists, as was in the original plan.

"It's gut wrenching," said Kowalchuk.

"It's sad because it's not at all what we wanted to do."

Gas Station Arts Centre along with Performing Arts Lodge, a group that advocates for affordable housing for artists, needed $1.5 million from the city toward the housing project, said Kowalchuk.

Kowalchuk said if the city had contributed that amount, other funders would have come forward to match, building momentum for the $26.5-million redevelopment project.

Instead, the city offered $500,000 in the form of tax rebates over 10 years, less than a third of what Kowalchuk and others had requested.

In July, the city said it could not provide more funding because it had no program in place to support housing with tax rebates outside of downtown Winnipeg.

"It does fall short," said Kowalchuk. "We need to keep going and moving ahead."

Kowalchuk said he will now return to the drawing board and ask for money from the federal and provincial governments to support the new, scaled-back plan.

"It's not at all the vision that we had wanted but we have to be realistic as a theatre," he said.

The centre will also be selling an Osborne Village-themed board game this Christmas season to try to raise money for the new project, he said.