NEW ‘substantive’ talks are under way to resolve a cash row which has put a multi-million pound regeneration scheme in Blackburn at risk.

The dispute between businessman John Khattir and the borough council threatened to delay or even scrap the project to turn part of the town centre into a heritage leisure, food and drink quarter.

On Thursday night Blackburn with Darwen’s executive board agreed to start the process to compulsorily purchase 11 to 17 Blakey Moor Terrace from Mr Khattir if a deal cannot be struck.

It is key to a £3.8million scheme to turn the Northgate area into a visitor attraction which has already secured a £1.5million Heritage Lottery grant.

The council owns the vacant remainder of the terrace.

Borough finance boss Cllr Andy Kay said: “We are now back at the negotiating table with the owner and his agent.

“Hopefully we can go forward from here.”

Council leader Mohammed Khan said: “Substantive talks are under way and hopefully we can resolve this quickly without the need for a Compulsory Purchase Order.”

The five-year scheme, which includes a major facelift for King George’s Hall, aims to create an area of cafes, coffee houses, bars and eateries with open space for residents and visitors to relax.

However deputy chief executive Denise Park said: “Should an agreement not be reached, the project could be substantially delayed and at worst put at risk.”

Mr Khattir, who owns The Godfather takeaway and surrounding land and buildings, said: “We are negotiating. I am hopeful we can reach agreement without the need for a CPO. We have not discussed figures.

The process of obtaining the order for the land the council wishes to buy could take two years and the delay could lead to the grant being withdrawn.

Tory leader Cllr John Slater said: “I am hopeful the need for a CPO can be avoided.”