The Friends of Severus Hill had raised almost £100,000 from local donations to help them in their bid to buy the hill, next to the Holgate water tower.
Owners Keyland – a sister company of Yorkshire Water – gave the Friends until the end of June to submit an offer.
But in an update on their crowdfunding page, the Friends have admitted that their initial offer has been declined.
They say they were told sale of the site has now been ‘paused’ so that Yorkshire Water can conduct a ‘feasibility study to see whether the site might have a role to play in providing future resilience to the water supply network in York’.
Jo Patton of The Friends of Severus Hill admitted that the news that Yorkshire Water were still looking at potential uses of the land had come as a ‘curve ball’.
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