A council used cash designed to breathe life into the high street to pay rent on an empty shop.
Worthing Borough Council spent £44,000 paying rent for two years on a property in Ann Street.
The shop was the home of Worthing First, a community interest company set up to help start-up businesses but which ceased trading on February 29.
It means the shop will lie vacant until January when the company can break from the lease.
Worthing resident Dan Thompson, the founder of the Empty Shops Network, said it was a waste of money and space.
He added: “It is incredibly frustrating. There is so much good work going on in Worthing and it is not that we need lots of money for these projects to work.
“It is incredibly disappointing lots of funding was handed to one group.”
Mr Thompson said there were “dozens of groups” who would have put the vacant space to good use but they were never told about it.
But company director Peter Bennett said a flood in the building meant the company was not able to trade, leaving it bereft of funds.
He added: “There was a flood and it was pretty horrible. We could not have it open to the public.
“Then there was a delay between the insurers and the landlord and they needed to get quotes from builders.
“The idea was to generate income by giving advice to start ups but we could not.”
Mr Bennett said it would not be possible to offer the shop now as Worthing First would have to ensure the premises were empty again by January or it would be tied into another three years of the lease.
He added: “The problem is we have no money.
“But it was a good idea and we helped a lot of people.”
Bryan Turner, the council’s cabinet member for regeneration, said: “Mr Thompson did not come to us for money while Worthing First did.
“We paid the rent up front to get a better deal and a two-year break which we are going to have to enact.
“I wish we still had the building but the spirit of the project is going on”.
As an example of the success of the scheme he pointed to Enterprise Hub, which has taken on Worthing First’s mantle and has offered help to 20 start-ups already.
See the latest news headlines from The Argus:
- UPDATED: Man accused of 'road rage' murder not giving evidence at trial
- 'The worst 90 minutes of football ever' Fan shocked by bigot's tirade
- Schools minister 'already seen test question he got wrong'
- Homophobic attack victim tells how he could lose his sight
- Albion fans around the world have eyes on the big game