A MULTI-MILLION pound deal to bring the site of the former Terry's chocolate factory back to life has finally been sealed.

York-based Grantside Ltd is paying parent company Kraft about £26 million for the site in Bishopthorpe Road.

Managing director Steve Davis is planning to convert the old Terry's office buildings into a prestige hotel, with a new spa and health club, creating about 200 jobs.

But he estimated in excess of 2,000 jobs could be created in the long-term through plans for 220,000 square feet of office buildings in a business park elsewhere on the site.

Today he revealed that the deal has finally been completed.

He said: "We are really pleased now that we have got the deal done. "It's really good news and now we can start to move forward with our plans for the site."

Mr Davis said the plan for the site included high-class apartments which could be created in the landmark Grade II listed building overlooking York Racecourse, and there might also be a new art gallery and/or a museum.

Employers on the 51-acre site would also be encouraged to commission artists to produce artworks such as paintings, sculptures and installations, to create an art trail across the site.

City of York Council is yet to agree on a final development brief, which is intended as a blueprint for prospective developers.

The authority published a draft brief last autumn, around the time the chocolate factory closed down with the loss of more than 300 jobs. It said the factory could be turned into a distinctive, high-quality hotel which York currently lacked, but it also provided an excellent opportunity for a prestigious headquarters for an organisation.

Nationally-known hotel chains have already expressed an interest in the prospective Terry's hotel.

Council leader Steve Galloway said: "The council is in discussions with the parties involved over planning and other issues. It is a high priority for us, combining as it does residential housing and the prospect of more jobs.

"I am confident that it will be possible to reach an agreement which will see the site developed in a sensitive way and that it will provide hundreds of new jobs and homes.

"We will work with the developers to create a community that is self-sustaining and which, in architectural terms, is a credit to the city.

"This site will help to sustain York's prosperity for many decades to come."

Updated: 09:10 Tuesday, May 02, 2006