When UNC-Chapel Hill announced plans last month for a $5 million performing arts center in downtown Chapel Hill, it did not go unnoticed in Carrboro.

Many in the neighboring Orange County town had balked earlier this year when presented with a similar proposal for a $15 million arts venue at the corner of East Main and Roberson streetsa plan bundled with a multimillion-dollar contribution from the town’s coffers.

“It was sobering to see a $5 million price tag on something being called an arts and innovation center in Chapel Hill, considering the price tag put to Carrboro was close to $15 million,” says Carrboro Alderwoman Bethany Chaney.

The 55,000-square-foot buildingdubbed the Carrboro Arts and Innovation Centerwould have served as a new home for the long-running Carrboro ArtsCenter and Chapel Hill children’s museum Kidzu.

Some, such as former Carrboro mayors Mark Chilton and Ellie Kinnaird, said the ArtsCenter’s new home would be a major boost for downtown Carrboro. Others suggested the town risked financial calamity should the 40-year-old organization, which specializes in performing arts and arts education, fail to right its budget woes.

That $15 million proposal called for a four-story glass-paneled building replacing a town-leased parking lot downtown. The landowners, Main Street Properties of Chapel Hill LLC, would donate the property to the town, and Carrboro would lease the land to the ArtsCenter. Roughly half of the building’s cost would be borne by public sources; the nonprofits would raise the remainder.

That planwhich Chaney described as a “manipulation” in Januarytoday appears dead. Don Rose, chairman of the ArtsCenter’s board of directors, told the INDY that the old plans are “off the table.”

“The town asked us to start over again,” Rose says. “That’s what we’ve been tasked to do. Let’s not make any assumptions about who’s in the building.”

Now the ArtsCenter is the subject of quiet negotiations between developers and town and county leaders. Town staff is expected to provide an update for the Carrboro Board of Aldermen later this month.

In the meantime, Chapel Hill leaders are trumpeting a partnership with the university and its Carolina Performing Arts for a theater venue and performing arts lab, although that proposalmostly financed by the universitycalls for a smaller, 8,500-square-foot space at 123 W. Franklin St.

Rose says the ArtsCenter discussions still involve Kidzuwhich has several alternatives for a new homeas well as town and Orange County leaders, who may be interested in a new public library branch on the property.

“There may still be a possibility that [Carrboro] is somehow involved in the financial support to this,” he adds. “Obviously, there’s a big question mark there.”

The ArtsCenter’s current home at 300 E. Main St., also owned by Main Street Properties, would be replaced by a new hotelthe second hotel on the block, as Main Street Properties completed a neighboring, five-story Hampton Inn two years ago.

The real estate company has been planning a dramatic mixed-use redevelopment at the property for several years, including an expanded ArtsCenter and Cat’s Cradle surrounded by retail space and restaurants.

Like the ArtsCenter, the Cat’s Cradle plans are also in doubt. In February, owner Frank Heath publicly expressed frustration that the iconic music venue had not been offered its own expansion deal.

Meanwhile, Rose says the construction of a similar performing arts venue in Chapel Hill should not impede a new home for the ArtsCenter.

“In general, more is better,” he says. “More opportunities for the arts to be showcased in our area is going to be better.”

Alderman Damon Seils, a vocal critic of the ArtsCenter’s January proposal, says new leadership at the nonprofit will be key to determining whether the town can make a deal.

“The town was not given a chance for a real partnership,” he says. “It was not at all about the size or type of the building.”

Seils says the town needs more details on the venture and a greater hand in its development. He says the ArtsCenter also needs to demonstrate its own stability.

The organization’s former director, Art Menius, resigned last year after paring down the group’s operations amid annual budget deficits, including a $250,000 shortfall in early 2011. (Menius came on board in 2012, when the nonprofit was already in financial tumult.) Since Menius’ departure, the organization has been led by an interim director, but Rose says the ArtsCenter expects to name a new executive director in July.

Leadership at Kidzu is also in flux. Pam Wall, the former executive director, stepped down in May for personal reasons, according to the nonprofit. Her interim replacement, Lisa Van Deman, could not be reached for comment.

The museum opened a new, 8,500-square-foot space in Chapel Hill’s University Mall this year, but the nonprofit’s leaders said they would move into the new Carrboro arts buildingif it’s ever completed.

That, according to Seils, depends on the ArtsCenter and its new leadership.

“If the town is expected to play a major role, we need to see a formal business plan,” he says.

Chaney agrees, calling the new ArtsCenter director a “critical piece of the puzzle.”

“I’d love to see both organizations stay in Carrboro,” Chaney says. “We just have to do it the right way.”