Funding negotiations have fallen over between three organisations trying to establish New Zealand's first long-term shelter for homeless alcoholics in Wellington.
The project, spearheaded by Te Whare Oki Oki Trust, had been given $500,000 of combined funding from Capital and Coast District Health Board and the Wellington City Council, with half coming from each organisation.
But the future of the proposed Island Bay facility, known as a "wet house", is now unclear, with Te Whare Oki Oki Trust saying on Friday that it is withdrawing from the funding arrangement.
The trust says it pulled out because the DHB is demanding a five-year business model, instead of a 12-month plan previously agreed to for the site.
Chairperson Ruth Harrison says the trust remains committed to establishing a wet house in Wellington and is pursuing other funding options.
Wellington Mayor Kerry Prendergast says the project does not work well in a residential community and this is a good time to take a pause.
Ms Prendergast says the council's start-up funding depended on equal contributions from other partners, but it would consider a new proposal.
Island Bay resident Robyn McLean says suspicions over the project's financial viability have been proven.
"We've said from the start that we don't think it's fair to relocate these people to an area that they don't actually want to be in for 12 months and then to say 'Sorry, we've run out of money'.
"We've felt all along that if this is to work and to gain community support, it needs to be viable."