An internal briefing document seen by the Yorkshire Evening Post reveals that “a number of commercial issues have arisen between the parties” in the Beeston and Holbeck private finance initiative (PFI) project.
Leeds City Council has now had to step in to broker a settlement to avoid further action.
The terms of the settlement represent “a reasonable outcome to the issues at dispute in light of the risks of a formal dispute resolution process”, the report says, adding: “The settlement enables the council more certainty on the issues raised.”
The scheme - one of the largest social housing private-finance building projects in the UK - has already been hit by multiple delays over the past few years, with the start date for construction work put off several times.
The project includes the refurbishment of 1,245 council homes, 388 new council homes and environmental improvements to the Beeston and Holbeck areas. It is part of a wider PFI scheme incorporating work in Little London and is taking place across 22 sites over a 20-year period.
Approval was granted five years ago, but was subject to a Government Value for Money review, which delayed the start.
Councillors had complained at the time that the hold-up was costing £1m a month because of rising costs.