The Treasury Minister says his department refused loan requests from Douglas Corporation for the Cambrian Place development because certain criteria were not met.
The local authority was seeking a total of around £14.5 million for its plans to build a car park, public library and offices on the site next to Lord Street.
A joint statement from the Department of Infrastructure and Treasury says there were a number of issues with the proposals.
They included a lack of consultation, no tendering process for the contract and building costs which were deemed too high.
Treasury Minister Eddie Teare:
Clip 1
Netflix shares first look at Heartstopper season 3
Ramsey Commissioners dealing of 'lamppost gate' complaint found as maladministration
New CRHS and sports complex could cost around £62 million
Lee Johnston withdraws from TT 24
Increase in penalty notices for parking on pavements
Suspended sentence for doorman who punched woman
