South Kesteven District Council has explained why it withdrew £4,500 of grant funding for the Stamford skatepark project.
The council promised to give the skatepark committee the money following a grant application in February 2011.
Including that grant, the committee managed to raise more than £150,000 towards the skatepark on the Recreation Ground.
It was granted final planning permission in March after a lengthy process, requiring a detailed management plan to be submitted.
But the committee and Stamford Town Council, which submitted the planning application, were disappointed to learn the district council grant had been withdrawn.
In a statement released to the Mercury and posted on the council’s Facebook page, head of community assets Paul Stokes said the grant had expired.
He added: “Unfortunately, the county-wide grant scheme was fully spent in the year 2012/13 and in any case a complete planning application had not been submitted before the deadline had passed for projects to be complete in order to qualify for the grant.
“Unfortunately, the grant scheme is not available in the current financial year.”
Skatepark committee chairman Marc Stanier said he was extremely disappointed the council could not extend their deadline and added that other factors had led to the planning delays.
But he added: “We see little benefit in tit-for-tat point scoring. Instead we will be focussing our efforts on addressing the funding gap that we are now faced with.
“This is not a huge gap and we are confident we can bridge it so we would ask the public to look out for future fundraising events and hopefully people will be able to support them, even in these difficult economic times.”