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A once hidden area of York could be transformed into a new landscaped garden and arts space as early as spring 2012.
The large area of land behind York Art Gallery will be opened up to create a whole new area of the Museum Gardens, creating pathways from Exhibition Square, the gardens themselves and Marygate.
The recent bat survey of the area has concluded that the land can be developed as there is no serious risk to any species.
The development, subject to planning permission, is key to the £6 million proposed refurbishment of York Art Gallery.
It is estimated the creation of the space will cost £300,000, with funding from the City of York Council and recently acquired funds from the Museums, Libraries and Archives Council (MLA).
If planning permission is granted, the development of the land will go ahead without the York Wheel being installed in the area.
Michael Woodward, commercial director for York Museums Trust, said: "The Trust has given a great deal of thought to the people of York’s reaction to bringing the wheel to this area of the city. While it had many supporters it also raised a lot of concerns, especially with heritage groups and the residents of Marygate.
"The delay in installing the wheel has also shortened the time it would have been in place by nearly half – dramatically reducing the economic value it would bring to the Trust and the city.
"We have taken these and other factors into account in deciding not to apply for permission to install the wheel. Instead we will focus on transforming this area of derelict land into an exciting new area in its own right, as well as linking the gallery with the Museum Gardens.
"We have informed Great City Attractions of our decision and wish them well with their future plans."
York Museums Trust will submit new plans for consideration by planning chiefs in the next few months, with the aim of demolishing the derelict huts in autumn this year. It is hoped the area will open to the public in time for spring 2012. The Trust will be consulting local people about future uses of the space.
York Museums Trust are currently working closely with architects Ushida Findlay on the £6 million plan to refurbish York Art Gallery, which would reopen in 2015. This includes the further development of this new space, with opportunities for outdoor exhibitions and performance.
The £6 million refurbishment plans also include:
Opening a new "secret" gallery on the first floor – creating a large and naturally lit space.
Expansion of the exhibition and learning spaces, with the City Archives set to be relocated from their current position to York Explore, Museum Street. (The proposed relocation is a separately funded project led by the City of York Council.)
It is estimated the York Art Gallery project will cost around £6 million, with around £1.5 million already secured thanks to a generous bequest from an anonymous benefactor. The Trust has already informally approached other funding bodies and will formally submit bids when the plans are finalised later in the year. If the funding is found and planning permission is granted the gallery will close for the refurbishment in late 2012 and it is hoped work would begin in spring 2013, with the gallery reopening in 2015.