The cost of the Phoenix Youth Centre extension has risen by £300,000, a report shows.
The centre , in Ashby Road, was built in 1969 and a plan to modernise and extend it was approved this year at a cost of £1.5 million.
Now Daventry District Council fears the bill could rise to more than £1.8 million because of a combination of higher-than-expected construction costs, and the possibility that VAT cannot be claimed back on the project.
A report into the matter has recommended money pledged to the community by housing developers should be used to meet the shortfall.
Officers who wrote the report, due to be discussed by councillors today, have now earmarked £42,000 from the Middlemore Estate – which had been intended for council’s reserves – and £332,000 from Micklewell Park.
The report says: “These being available to the project is likely to be sufficient to ensure that quality upgraded facilities for youth and indoor sports are provided in advance of the major growth planned for Daventry.”
The report also reveals that time constraints on various grants pledged to the projects - which aims to increase the number of visits by young people from 36,500 to 50,000 per year - mean the council may now have to step in and pay for part of the project.
The situation has arisen because one of the sources for funding the extension was already the developers who built the Mickelwell Estate. However, this does not become available until the first development site is sold, which could be some time yet.
If the sale is not complete during 2016, both that money and a large grant from Sport England - which made the Micklewell cash a condition of its involvement - would be lost.
Councillors will decide today whether the council should cover the Micklewell cash to keep Sport England onboard.
The report says: “Given that the Micklewell site is currently being marketed for sale, it is considered it would be a short-term requirement.
“[However] the council must agree in this scenario its exposure timeframe is uncertain and could be for the whole sum for the whole construction period, or beyond.”
The Phonix Centre upgrade should be complete by November 2016.