Yesterday, principals of the development firm settled the issue, and what they had to say can only be described as a major setback, especially for Supervisor Phil Cardinale, who had pushed more than two years ago to have Apollo awarded a master developer designation.

Apollo's managing partner, Richard Mack, told the Town Board in a special meeting yesterday that Apollo's plans for Phase 1 of its urban development project have been significantly pared down -- in fact, nearly cut in half -- from the 207,207 square feet it had proposed constructing on the site of the old Woolworth building on East Main Street, which it purchased in April of 2006, to 116,107 square feet.

Apollo presented this design of phase 2 for the south side of East Main Street, next to the East End Arts Council buildings.

What is now planned, Mr. Mack said, is a 90-room hotel, a six-screen movie theater and 1,000 square feet of retail space. But he admitted that after trying for two years to entice a movie-theater company or a hotel chain to become tenants, he's come up dry.

Ironically, the reason he gave for lack of tenant interest is the very thing Apollo once thought it could solve -- the glut of shuttered stores. He said the feedback he's been getting from prospective tenants is that they don't want to be downtown because of all the vacancies and the lack of big stores there.

He said Apollo's inability to get others to sign leases was something he didn't expect two years ago, when his firm began negotiations with prospective tenants, including Clearview Cinemas and Marriott Hotels. Nevertheless, he said, Apollo would move ahead anyway with its scaled-back plans.

"We were very hopeful we would have some of the space pre-let before construction," Kevin Davis, an Apollo partner, said. "But we're willing to go without any leases, which is very risky, but we're so committed to this project. We spent close to two years soliciting tenants and right now, we have nothing to show for it.

"We're at risk of being overly aggressive," he said, "but we've concluded that we have to start. We can't continue to spend money on an empty piece of land with no return on the money. We may end up with brand-new empty space, but that's a risk we think we have to take."

Mr. Mack said Apollo's ideas for Phase 2 on the south side of East Main Street, across from the Woolworth building, have also been scaled back. Plans now, he said, call for a five-story, 125,700-square-foot building east of the East End Arts Council that would have retail and restaurants on the ground level with 68 condo units on the upper floors and a five-story, 170,400-square-foot building west of the East End Arts Council, with retail and restaurants on the ground floor and 90 condo units above it.

The problem, however, is that Apollo doesn't own anything on the south side.

Apollo had earlier sought to purchase seven properties on the south side from Riverhead Enterprises, but the deal fell through and Apollo eventually requested condemnation, which would have the town buy the buildings and re-sell them to Apollo. But yesterday, Mr. Mack implied he was not yet ready to press hard for condemnation.

Riverhead Enterprises' principal Sheldon Gordon, who attended Apollo's presentation, said afterward that he is still hopeful the two sides can make a deal without using condemnation, and Mr. Mack and Mr. Gordon were seen huddling in Mr. Cardinale's office following the presentation to the Town Board.

Mr. Davis admitted that his company is about nine months behind its original time estimates and said he now anticipates completing the job on the Woolworth site by June 2010. He said Apollo could give no time estimates for the south side because Apollo doesn't yet own property there.