A controversial affordable housing project in Fredericton has been scrapped after the costs for environmental studies became too high for the non-profit developer.

In November, Fredericton city council approved Fredericton Non-Profit Housing Corp.'s plan to convert a building on Dundonald Street into a six-unit apartment complex.

Residents along Dundonald Street had argued the building was only zoned for a two-unit complex and that the conversion would bring more traffic to the neighbourhood and destroy its family ambience.

Developer Eldon Toner told CBC News he decided to back out of creating the affordable housing when he learned he'd have to pay more than $30,000 for environmental studies on the site.

"We did a phase one and then a phase two and the phase two was to recommend a phase three environmental study on it and we decided at that time not to because of the cost and the money we had already invested," Toner said.

The environmental report is required because the building used to be used as a commercial site.

Toner said his organization had already spent about $2,500 on the first assessment and $15,000 on the second. Estimates suggested that the third report would cost between $17,000 to $22,000, Toner said.

"This is one of the last blocks on our street to maintain that family environment. So we're really relieved," said Kim Howland, one of the community members who opposed the renovation of the building.

Although the work won't go ahead, the building being designated for the construction of six units will remain, said Coun. Mike O'Brien.

But O'Brien said that it's unlikely that private developers will be interested in investing on the site.

"Non-profit organizations have access to some special government funds to assist them in those renovations, whereas a private developer doesn't have access to the same funds," O'Brien said.

Toner has moved on to another affordable housing project at a former bank on the city's north side.