The deal for the River View Hotel to be sold to the Royal Canadian Legion for a 50-unit seniors' housing project, is off.

The news comes after 6 1/2 months of negotiations, the signing of a conditional purchase agreement and an application to the city for rezoning.

In a statement this morning, River View Hotel owner Ed Festel said he was informed last Thursday by the local Legion branch that it could not meet the financing stipulation of the conditional agreement signed in May.

Festel said he was 'extremely disappointed' by the news.

He added he's unsure how much money he's invested in the sale since invoices from lawyers haven't come in yet, but estimated the loss of sales to be in the $10,000-range.

Tour operators who would normally book at the River View have already signed on to stay at other hotels during the 2006 summer season, believing the hotel had been sold.

Now Festel is planning to contact those operators today and tomorrow to update them on the situation.

He's also planning to do more marketing to let people know the River View isn't being sold. Though the sale agreement had been conditional, he said, many people around the world had heard the River View had been sold.

He's planning to upgrade the hotel this fall as the structure, formerly known as the Regina Hotel, continues to operate as a hotel for the 'foreseeable future.'

It was expected the hotel would be turned over to the Legion in October.

'Obviously, we feel let down on a personal level, but we're saddened for the community as well,' Festel said in a statement. The change-over to seniors' housing would have been a perfect downtown location for seniors, he added.

At the press conference to announce the sale in May, the Legion wouldn't state how much it would be paying for the hotel, but suggested the price tag on the renovations needed was approximately $4 million.

Much of the renovations would have focused on the kitchens and bathrooms.

Meanwhile, the property has been going through the rezoning process for seniors housing at city hall. The Legion applied to amend the entire structure to Commercial Waterfront Restricted with a condition that multiple housing be permitted on the first floor.

No delegates appeared at a public hearing on the rezoning last week. A report on the hearing is scheduled to come forward at tonight's council meeting.

Planning manager Lesley Cabott could not be reached for comment this morning on where the rezoning application goes from here now that the sale is off.

'It hurts and it was not an easy decision,' David Laxton, the second Legion vice-president and co-chair of the seniors' housing committee, said this afternoon.

The decision to not go ahead with the purchase came after the Legion wasn't able to get the Canada Mortgage and Housing Corp. insurance in time for the financing to take over the premises on Oct. 3.

'Thursday was our drop-dead date,' he said.

When thinking of the situation, he said the word 'devastated' comes to mind, though he's hopeful the project will still go ahead at a later date.

'We're still proceeding,' he said.

When the Legion is able to secure its financing, he said, he expects it will make an unconditional offer to the River View.

Like Festel, the Legion is still waiting to get the invoices on all the legal and other bills on the investment.

He estimated the Legion will spend approximately $40,000 on those bills, though he said that was funds 'well-spent' as it continues working to develop seniors' housing.