DEVELOPERS may get the all-clear this week to restart work on a £130 million city-centre scheme in York, four-and-a-half years after the recession led to it being shelved.

City of York Council planning officials say the second phase of the Hungate development, including 195 homes and space for shops, restaurants and bars, should be approved as long as a deal is struck over affordable housing and payments towards community facilities – an issue which threatened to derail the project in 2012.

Hungate (York) Regeneration Ltd had warned it may never complete the scheme unless a new agreement was reached with the council over contributions known as Section 106 payments.

If the council’s planning committee backs the plans for the second stage of the development, the company will be able to start building the homes once it commits to providing 31 affordable homes – 16 per cent of the total, which is four per cent lower than originally required under the council’s affordable housing policy.

It must also agree new “trigger points” when it would have to make contributions towards roads, CCTV, education and open space.

The overall Hungate project is intended to have 720 homes and may not be finished until 2024.

Its first phase, including 162 flats and houses, was completed in 2009, but work stopped shortly afterwards amid the economic downturn.

The second phase would now have more housing and less commercial space than originally planned.

A report by council planner Rachel Tyas said this would affect the area’s “vitality”.

However, it added: “The applicant’s argument that there would not be adequate interest to support the amount of commercial space previously proposed is accepted and the remaining commercial unit would face on to St John’s Square, the primary space within the development.”

The Guildhall planning panel, which opposed the Hungate scheme in the past, has said it believes the new design of the second phase is an improvement.

Four objection letters have been lodged, with concerns including the impact of the development on nearby Rowntree Wharf’s appearance, the possibility of construction work polluting the River Foss and claims it could create “wind tunnel issues”

The scheme would have 99 one-bedroom, 80 two-bedroom and 15 three-bedroom apartments around a central courtyard, as well as 78 car-parking spaces and 146 cycle spaces.