Fears are growing for the future of the main centre of contemporary visual arts in the northeast of Scotland following last week's announcement of North Sea oil millionaire Sir Ian Wood's ambitious plans for Aberdeen's Union Terrace Gardens.

Critics say the scheme will derail the existing plans for Peacock Visual Arts' new venue, potentially leaving the centre homeless and ending its 34-year history in the city. One called Wood's plans "sabotage".

Last Tuesday Wood unveiled a plan to raise the sunken gardens to street level, creating a new city square that he likened to "a grand Italian piazza and a mini Central Park". He pledged up to £50 million of his own money, to be matched by public funding pending a feasibility study.

But Peacock Visual Arts, housed in a converted church hall off the Castlegate, has already secured planning permission and 70% of the funding for a new £13.5m home on the same site, planned to open in 2010. The organisation said it was told of the new plan only a week before the announcement.

While the feasibility study, commissioned by Scottish Enterprise and to be delivered in March, will factor in a new location for Peacock, due to the time and project-specific nature of the centre's funding any delay or change could kill the project and potentially Peacock itself. The lease on Peacock's current home runs out in 2011.

Lindsay Gordon, director of Peacock Visual Arts, said that while Wood's gesture to the city was "incredibly generous and a fantastic opportunity for the city", its timing has created significant issues for the centre.

"We have to show an open mind, but also show the world what the problems are," he said. "I'm trying to get some kind of guarantee that we won't lose the money while waiting on what potentially could be a very interesting opportunity with Sir Ian Wood's scheme. There is a very real risk that unless we get guarantees in place, the city of Aberdeen could be left with nothing."

Gordon said Peacock was first informed of Wood's plans a week before the official announcement last Tuesday.

"My board and I would have appreciated earlier discussions, so we might have been able to stand together at the press conference," he said. In the end, Peacock Visual Arts were not invited to the official announcement.

Local artist Joyce Cairns said she was "outraged" that Peacock could be treated as an "afterthought". She applauded Wood's generosity but questioned whether the council could grant planning permission to Peacock and then change its mind.

"Having gone this far, can the town say you can't do it?'" she said. "I'm just amazed that poor Peacock, a non-profit making organisation, has been taken over by corporate finance. It's a great offer from Sir Ian, but we would like him to be more sympathetic."

She added that the planned Peacock building, designed by London architects Brisac Gonzalez, could have a similar energising effect on Aberdeen as Dundee Contemporary Arts has had on Dundee since 1999. An economic impact study estimated that the new centre would bring £4m a year into the city.

"No-one comes to Aberdeen," she said. "Nothing is reported. Aberdeen does not register on the cultural map of Scotland. That's why we need an arts centre on the scale proposed, otherwise it will remain a hillbilly town. And that is sad."

Since it was founded in 1974, primarily as an artists' workshop, Peacock has hosted artists such as Elizabeth Blackadder and John Bellany, who have created work in its print studio.

Broadcaster Edi Stark said that when she moved to Aberdeen 26 years ago, Peacock was "a star in the firmament". The threat to its future is "devastating", she said. "For the people in Peacock it is absolutely heartbreaking and a complete kick in the teeth, when you consider all the work and effort they have put into having this amazing building," she said. "There are conditions to Sir Ian's offer that take Peacock right out of the game. They would have to move, and that puts them back to square one with some funding. It is sabotage."

Peacock has raised more than £9.5m, including £2m from Scottish Enterprise, £3m from Aberdeen City Council and £4.3m from the Scottish Arts Council. The Arts Council money is project-specific - if Peacock changes its plans significantly it would have to apply again.

Wood said he would not guarantee any money Peacock lost if it had to adapt its plans to fit into the new scheme for Union Terrace Gardens. However, he hoped the funders would be flexible about Peacock's needs.

"I would absolutely not want to be party to stopping something that has a good chance of happening," he said. "This is absolutely not an either/or between the plans and the Peacock Arts Centre. The truth is, the Peacock Visual Arts will be in a significantly better position if it is developed as part of the more ambitious scheme. It will have a choice of site on a new city centre square with a huge number of people. And I believe it believes it will be better too."

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