The project is the development of council-owned freehold land in Man St in central Queenstown, formerly part of the Queenstown camping ground.
"Over the past two years we have progressed this project, and after an `expressions of interest' process, two development companies were shortlisted to prepare comprehensive development and financial proposals for the property," Mr Field said.
The council confirmed in October 2008 one of the two developers had been selected as the preferred participant.
"Unfortunately, economic events overtook the process and the development company was not able to provide the financial covenants required by council," Mr Field said.
The council had terminated the "preferred participant" status.
He said it was likely to be at least 12 months before any change in market conditions would warrant a re-marketing of the property.
He invited other developers to talk to the council if they could deliver the existing design brief.
The issue was flagged in the 10-year plan adopted in June.
The plan says: "[The] council has assumed that it will not receive any proceeds from the Lakeview project [formerly Queenstown camping ground] during the next 10 years because of the worsening global economic climate."
