Kawerau district council in eastern Bay of Plenty has backed out of buying a local school it hoped to turn into a training centre.
It is another blow for young people in the town that has been hit hard by two school closures and job cuts at the local Norske Skog paper mill.
The two schools were replaced by Tarawera High School, which caters for students from Year 7 to 13.
The town's mayor, Malcolm Campbell, says the council could not buy the closed Kawerau Intermediate school without commitment from the Ministry of Social Development to lease office space at the school.
He says the council still has hopes of creating a training centre for young people but he says it could not purchase Kawerau Intermediate from the Ministry of Education for $2.7 million.