A community buyout of a derelict 19th century mansion in Argyll has collapsed because of a disagreement with the local council over valuation.

After a decade of trying to sell it, Argyll and Bute Council will now be left with Castle Toward on the southern tip of the Cowal peninsula south of Dunoon . It is reportedly costing the authority £20,000 a month in maintenance and security costs.

Meanwhile local campaigners say more than 80 jobs, up to £10m in inward investment and "in excess of £850,00 in annual economic benefit to the area" will now be lost.

The South Cowal Community Development Company (SCCDC) was trying to buy Castle Toward and the 143 acres that surround it, from the council using the community right-to-buy provisions in the land reform legislation.

The community group's vision was for "nature trails, mountain biking, tourism hub, community allotments, retail craft space and the greatly desired tea room."

SCCDC insisted it had attracted "a major national player in the outdoor education sector" prepared to invest.

The Scottish Land Fund (SLF) had awarded the development company £750,000; its business plan prepared was approved by Highlands and Islands Enerprise (HIE); and the First Minister herself had called for a negotiated settlement. But the bid foundered on price.

The district valuer put a figure on the property, as the legislation requires, and he had come up with £1.75m However , the valuation given to the community group by international property experts Savills, was £850,000. So that was the final offer tabled by SCCDC, with its leaders insisting that the council did not have accept the district valuer's figure as the only potential sale price.

The council had offered to lend the group £1m to meet the district valuer's price, but SCCDC chairman Alan Stewart said they would not be able to pay it back.

"Our Business Plan has been scrutinised in an effort to adapt the five-year projections to incorporate the repayments of the £1m suggested loan by the council. However this would dangerously weaken the plan, which has solid strength and the backing and support of HIE, SLF and the government. Such a drastic and punitive change made to this Business Plan would fatally increase the level of risk. Consequently we are adamant that it could not be accepted," he said.

After the meeting Mr Stewart said he felt "shell-shocked" the community buyout had collapsed after the years of effort that had been put into it by local people.

SCCDC spokesman Derek McIntyre said "What kind of message does this send out from Argyll with its decling populaion, to potential investors? We were backed by all these national bodies and had a tenant coming with 80 jobs and £4m of their own money to invest. They are in outdoor education and wanted to branch out into family holidays at Castle Toward."

But a council spokeswoman said : "Today's special council meeting was requested on the basis of a new valuation of Castle Toward, commissioned and obtained by SCCDC to support their case for purchasing the property. "

However external specialist advisers retained by the council had a number of criticisms of the SCCDC-commissioned valuation and did not alter their view on the £1.8m market value

"The valuation accepted by the council for the purposes of the community buy-out process is, of course, that of £1.75million provided by the District Valuer, who was appointed by the Scottish Government to provide an independent assessment of the market value," she said.

The council acquired Castle Toward for £1 following the break-up of Strathclyde Region in 1996. It closed the facility in November 2009, declaring it unfit for purpose.

In the 1940s the estate was bought by Glasgow Corporation as a residential school for children recovering from illness or living in deprived home conditions. It then became available to all Glasgow primaries for residential education and operated for 50 years as an outdoor education centre.