A FLAGSHIP building on Saltburn's seafront is in danger of becoming a white elephant after council chiefs branded it unusable.

Construction work on the £570,000 Foreshore building was completed two years ago, but the building - which includes a cafe, two retail units and a community room - has never opened because of water seeping in from a bank behind.

Businesses were expected to begin moving in this summer after it was announced in April that all the problems had been ironed out, but the matter could now be set for a lengthy legal wrangle.

The problems have led to a dispute over who is responsible. Architects Jane Darbyshire and David Kendall Ltd, of Newcastle, and South Bank builders SGW Construction both deny being at fault.

Simon Williams, managing director of SGW Construction, said: "We carried out the work in accordance with the specifications and have been issued two certificates confirming that, as well as having our retaining monies released to us.

"We aren't at fault, it's as simple as that."

In a letter to prospective leaseholders, Redcar and Cleveland Borough Council chief executive Colin Moore admitted the building was unusable.

Coun Dave Fitzpatrick, cabinet member for culture, leisure and tourism, said: "Unless the architect and builder can come to an agreement, a judge will have to resolve it and that could take years.I have huge sympathy for the people who are trying to move in. The building could be a big business and tourism boost."

Harry Meckliffe, 41, who plans to open a kite shop at the building, called for urgent action before his dreams are dashed.

He said: "This is where I want to be. I could set up a kite school, bring in outdoor activity instructors - the sky's the limit.

"I had my tender accepted yet I've hung on for 18 months. It's an absolute disaster."

He added: "I still want my lease to go through - I've spent £3,000 on leases and business plans and I'm talking about a £30,000 investment for Saltburn."