The Jekyll Island Authority and a private developer are pulling out of an agreement that would have put $120 million worth of hotels and time-share accomodations on the state-owned island.
On Monday, Governor Sonny Perdue and the J.I.A. broke ground on the $50 million public part of a massive renovation of aging island facilities.
It's the private component that's now thrown into uncertainty.
The J.I.A. and the developer Linger Longer announced on Tuesday that they are ending their relationship, mostly over the timing of planned construction.
In a prepared statement, J.I.A. Executive Director Jones Hooks blamed the shaky economy.
"The economy has created much uncertainty," Hooks wrote. "In my 30 plus years in community and economic development, I have not seen things so bad."
The Linger Longer project now becomes one of the most spectacular real estate busts on the Georgia coast.
A J.I.A. spokesman, Eric Garvey, insisted that the privately-financed "island village" still would go forward, but in smaller parts.
"By breaking up some of these pieces, it gives us the flexibility to find the right partner, and in fact, we're optimistic that we can go forward, maybe even faster than we would have otherwise," Garvey told reporters in a conference call on Tuesday afternoon.
Recently, critics have blasted the deal between J.I.A. and Linger Longer as politically corrupt.
The spokesman says, two years into their relationship, no money has exchanged hands between the two partners.