THE future developer of Watchet's East Quay will have to foot the bill for a compensation pay-out to the district council's ditched developer Urban Splash - but only if they decide to build homes. West Somerset Council members met behind closed doors last week to agree the terms of a compensation package after previously deciding to drop Urban Splash from its East Quay plans following a disagreement over how much the site was worth. The compensation cash will come from a levy imposed on any future residential development on the site. The council has already agreed to repay a £50,000 deposit handed over by Urban Splash in 2006, plus £22,300 in interest. But the firm has also demanded compensation to cover what it views as its significant investment to date in the site. Although the details of the compensation deal remain under wraps, councillors are known to have earmarked a maximum of £70,000 to cover the claim. The as yet unadopted minutes of the last full council meeting detail the outcome of confidential discussions relating to "a claim for financial compensation . . . against the council by Urban Splash Developments Limited". The minutes state that "a maximum contingent cost limit of £70,000" be agreed as "a settlement with Urban Splash". The minutes continue: "In doing so, the council approves the addition of £70,000 to the capital programme for the East Quay scheme for this purpose, as a further cost of disposal. "Any expenditure in excess of this sum that is deemed necessary would be subject to further council approval." Councillors also gave delegated authority for the council leader and lead member for resources to agree the final deal, subject to further legal clarification and advice. In a separate statement, a spokesman for the authority confirmed the council had approved recommendations to both repay the deposit with interest and agreed to the principle of settling "outstanding matters" with Urban Splash. "A final commercial arrangement remains subject to confidential negotiations and it is likely that it will take one month to complete the final termination agreement. "It is proposed in principle that a modest charge would be placed on future residential development - not householders - on the Watchet, East Quay site," the spokesman said She said the council's lawyers were making progress on a deed of termination as a matter of urgency. Urban Splash was picked as the council's preferred developer for the East Quay site back in 2005 and came up with plans for a complex of homes, retail outlets and community space. The company's attempts to bring the development to fruition weathered economic downturns, local objections and conflict with the boating fraternity over the use of a quayside area. But the key stumbling block proved to be the amount of cash the company was prepared to pay for the site after the original plans were scaled down to just 30 homes rather than the envisaged 83. In February, councillors dropped the Manchester-based developer after it offered £180,722 for a long-term lease of the land, believed to be considerably less than an undisclosed district valuer's estimate of its worth. The council is currently in negotiations with the marina operator to secure the future of part of the site, while a number of other organisations and firms are believed to have shown an interest in other sections of the quay.