A plan to build the proposed event centre has been dropped, Thunder Bay's mayor said.

The decision was announced Monday afternoon, four days after council voted late last Thursday night to proceed to the design and build stage for the proposed centre.

The announcement came after Mayor Keith Hobbs received a letter advising him the city was ineligible for federal funding for the project, including the use of the Federal Gas Tax.

The city originally sought $23 million from the federal government and $36 million from the provincial counterpart, but the mayor was informed that the project was not eligible for federal funding because of the involvement of professional sports.

Thunder Bay Mayor Keith Hobbs, flanked by councillor Joe Virdiramo on the left and city manager Tim Commisso, made the abrupt announcement on Monday after receiving a letter from the federal government. (Jeff Walters/CBC)

“Professional sports are first and foremost the responsibility of the private sector, which is why our suite of infrastructure programs does not allow for funding of facilities that will be used by professional or semi-professional athletes,” the letter read.

The city received the letter on Monday, signed by Denis Lebel, minister of infrastructure, communities and intergovernmental affairs. Read the full letter below.

Hobbs said earlier this month that the Winnipeg Jets' AHL farm team would move to Thunder Bay if the event centre is built.

The only way the city can be eligible for federal funding is if it builds a stand-alone convention centre, Hobbs said.

“I really think that's a dumb idea," Mayor Keith Hobbs said. "I think we have to look at it, see if it's affordable, see if it falls in the realms of what we've already presented."

The city’s option, Hobbs said, is to shelve the event centre plan for now.

City manager Tim Commisso said, the city made it very clear that the AHL team would only use space in the hockey arena.

"We obviously knew there was an issue with the professional team," he said at the announcement. "But, our position was, and we put this forward to them in detail, is that you can clearly distinguish the event centre space."