A MAJOR city centre regeneration scheme has finally been given the go-ahead - after years of being stalled by private developer plans.

City of York Council will instead take over the development of the Castle Gateway area - meaning the project can be car-free and low carbon.

But the local authority will need to borrow more than £45 million in order to kickstart the project - a move councillors admit is “high risk”.

The Castle Gateway scheme includes plans to build 106 apartments and shops in Piccadilly, a new pedestrian and cycle bridge over the River Foss, a park on land behind the Castle Museum and close the Castle Car Park - replacing the parking spaces with a multi-storey to be built at St George’s Field.

Senior councillors backed proposals for the council to be the developer of the project at a meeting on Tuesday.

The council says this means it can make sure the scheme is sustainable - and will provide car-free housing, reduce carbon emissions from the homes by 28 per cent and stop the apartments being used for short term rentals.

And there could be further low carbon measures rolled out at a later stage.

Cllr Christian Vassie urged council bosses to make Castle Gateway a “landmark zero carbon development”, adding: “It is critical to our success. The great thing is that because we are the developers we set the standards of construction.”

Under the plans, the council would take out a short term loan of £45.8 million - but make back £42.5 million of that money within three years from the sale of the apartments and income from commercial spaces.

A report says the local authority would be able to build the new bridge in the “shortest possible timeframe”.

Cllr Nigel Ayre said: “It’s been one of the most talked-about and controversial areas in the city for some considerable time.

“Private sector has attempted at length to bring forward proposals that have very rarely got the support of residents - very rarely been able to get across the line.

“Most people will agree that Castle Car Park is not suitable as a car park, either as a location for Clifford’s Tower or actually if anybody’s tried to use it as a car park.

“It’s not particularly suited as a car park. Finally being able to get rid of that from the city centre and turn that into a new section of public realm will be a huge step forward.

“That’s not to say there isn’t a significant amount of risk. There is significant short-term borrowing and that’s something that we need to acknowledge.”

Peter Sheaf, from York Cycle Campaign, raised questions about the sustainability of the new multi-storey car park - which will replace spaces lost at Castle Car Park - but council officers said St George’s Field is in a flood risk area and can only be used for certain developments and that businesses want city centre parking.

A planning application has been submitted for both schemes and is set to be decided in March.

The next steps will see the council appoint a contractor before further decisions are made on funding.

The report says the new car park could be complete by July 2022 and the apartments, bridge and park could be finished by May 2023.