Talks to develop U2 Tower are close to collapse after both sides in the deal reached an impasse over payments

Talks between the Dublin Docklands Development Authority (DDDA) and the Geranger consortium which won the tender to develop the U2 tower in Dublin's south docklands are close to collapse. Informed sources say the two sides have reached an impasse on the issue of a deposit to be paid for the site.

The DDDA wants the deposit to be non-refundable but Geranger, which is owned by Ballymore, U2's band members and Paddy McKillen, is stressing that it is not willing to provide that.

"The DDDA needs to take account of the current circumstances in the market," a source said, adding that crunch talks on the issue will take place over the coming fortnight.

A spokeswoman for the DDDA had not returned a call seeking comment at the time of writing. Geranger could not be contacted. It won the rights to develop the 120m building last year even though its bid is believed to have been almost €30m less than the highest offer. The Riverside II Partnership is understood to have bid at least €100m for the site, while Sean Dunne bid about €75m. Construction on the Norman Foster building was due to begin this year and be completed by 2011 but has faced numerous delays due to the downturn in the property market.

According to its annual return, Geranger is 40% owned by Ballymore Ireland, 20% owned by Paddy McKillen with the remaining 40% held by Trevor Bown, a former senior partner in KPMG who is acting for U2 and has advised the band since 1996.