The dramatic economic downturn has placed a questionmark against Leeds Metropolitan University's huge investment programme, after Professor Simon Lee's sudden announcement of his impending departure last week added to the rising tide of uncertainty at the university.

Leeds Met last night insisted its financial position was sound, although it did acknowledge that one or two longer-term rebuilding projects may be shelved.

Finance director Stephen Willis said long-term borrowing may go as high as £100m and added the university's ability to recoup money from selling obsolete buildings and make profits from student accommodation and academic means had secured financial stability.

The university, which has over 40,000 students and around 3,000 staff, has declined to provide any explanation for Mr Lee's resignation and the vice-chancellor declined to comment.

But it can be revealed that governors have been in dispute over the university's cheap tuition fees policy and that Leeds Met has had to increase its borrowing levels to ease the financial burden of massive redevelopment and eye-catching expenditure on professional sports clubs.

Staff at the university, who have already alleged a bullying culture was endemic at Leeds Met, now fear for the financial future.

University and College Union regional official Geoff Brown called for more information on the reasons for Mr Lee's resignation. "We need to push the governors now to find out what is going on. This is a public utility funded by public money," he said.

The university's governors take overall responsibility for the running of Leeds Met but chairman Ninian Watt declined to answer any questions about the departure of Mr Lee or any other questions about the university's financial position.

Although the reason for Mr Lee's resignation remains unclear, the likely need to increase the current £2,000 a year tuition fees – possibly from 2010/11 – may have played a part. The vice-chancellor saw low tuition fees – the lowest in the country – as a key plank in the development of Leeds Met.

The issue has split governors. Janet Carr, co-opted governor and Leeds Met Unison official, said: "Some governors think it's necessary to increase the tuition fees.

"We discussed it but the vice-chancellor absolutely wanted to keep the fees where they are. We are the lowest charging university in the country."

One of the key areas of Leeds Met's rebuilding programme, which includes around £14m set aside for Yorkshire cricket's Headingley ground and the newly-built £57m Rose Bowl building in the city centre, has involved selling off university land and buildings. The Rose Bowl will be the new home of the business school.

Six months ago, Leeds Met had to ask the Higher Education Funding Council for England for special permission for a 50 per cent increase in the amount it spends servicing long-term debts. The council approved the rise from four per cent to six per cent of turnover.

A spokesman insisted it was a standard procedure and added that eight of around 130 universities in the UK had their borrowing thresholds increased.

It has also emerged that Leeds Met has sold its Brunswick Terrace site – where the proposed new Leeds arena will be built – for £6m, £2m less than expected. Leeds Council, which owns adjoining land, moved in to buy the site off Leeds Met after a developer pulled out of plans for a large-scale residential and office scheme.

There are also concerns about the proposed development of the university's Civic Quarter site through Manchester-based property company Modus. Leeds Met had hoped to sell off its tower blocks as part of a £300m scheme to build offices, shops, a hotel and university buildings.

Modus director David Skidmore described the "structured deal" as enabling the university to "accelerate their ongoing developments elsewhere."

However, although Leeds Met has received payment for one part of the site there has been no application for planning permission and the university could be facing major delays in receiving further phased payments.

Last night Mr Skidmore said: "At present, whilst things are very difficult our programme has not been unduly affected, yet. It is a case of getting future occupiers who are taking strong interest in our proposed development to fully commit on the terms that we are currently in discussion on."

Mr Willis acknowledged up to £15m is at risk if the Modus scheme does not go ahead but the university would still seek to resell the tower blocks.

He insisted: "In terms of our finances, there are completely unfounded rumours. I don't recognise in any way a difficult financial situation. Nothing has changed because of the resignation of the vice-chancellor."

He said the university had generated a cash inflow of £29m over the last five years and £57m from the sale of assets, which would cover borrowings for the rebuilding programme.