The city council has told Te Pataka o Rakaihautu Banks Peninsula Community Board there is no funding available to repair the stables.
Dietsche had put a proposal for the future of the stables to the community board in December.
The cost to repair the building was estimated to be $3.4 million in 2024.
He went into the project not expecting city council to fund the project and is looking to use a similar method to the Governors Bay Jetty rebuild.
The city council sold the jetty to the Governors Bay Jetty restoration Trust for $1, which then raised the funding.
"(We’ll) have the council sell it to us for a dollar, we pursue the repairs through private means, then when it's all up and running, we could sell it back to the council for them to maintain it,” he said.
"We’re going to continue to pursue it, whether the council’s going to fund it or not, it’s not a big deal.”
The heritage building, built in 1914, was severely damaged in the 2011 earthquakes and became unsafe to occupy. It has remained empty and unused since.
Dietsche had a walk through of the stables last week with the project’s technical team and Lyttelton Harbour Business Association chair Sabrina Saunders.
"We came away from that thinking the conditions certainly need some work but there’s nothing here that’s insurmountable,” he said.
City council will be covering holes in the roof and securing the building next week.
Dietsche is now waiting on formal agreements with the project’s technical team to be finalised.
The group will then put together a plan to submit to potential partners.
Dietsche has received expressions of interest in using the space from 21 individuals and groups.
City council’s cost estimate comes from ChristchurchNZ’s proposed high end redevelopment of the stables in 2024, which included hospitality outlets, visitor accommodation, an entertainment venue, community spaces and terraced housing.
The agency has not worked on the project since.
Dietsche wants to retain the building’s stripped back and historic look, which he said would bring down the cost significantly and make it affordable for Lyttelton artists to use.
"I don't think it would be something that really local Lyttelton artists and musicians would want. I think it's more of a rough and rugged feel,” he said.
