Householders could end up footing a £10 million bill over the next 15 years for a loan given to Richmond Theatre for its refurbishment in 1991.
Councillor Tony Arbour, leader of the Conservative group on Richmond Council, claimed that the size of the vast debt had only now been confirmed by council chief Richard Harbord's figures.
The leader of the Lib-Dem controlled local authority, Councillor David Williams, admitted Mr Arbour's statistics were correct but only if none of the loan was repaid.
He confessed that no money had been repaid during the last year because the theatre, while able to cover its running costs, has not managed to produce a profit.
Mr Williams said: "We still expect them to repay the money. From time to time they have repaid some of these costs. This financial arrangement was the only way to stop the theatre closing."
An outside management company which could be running the theatre by the new year will ask for no more taxpayers' money to balance the books.
The theatre's trustees are in negotiations with the Ambassador Theatre Group (ATG) for an initial five year agreement to manage it.
When the possible deal was announced in November, ATG's executive director, Rosemary Squire, was confident about the future.
She said: "We aim to reverse the downward spiral which the theatre has been in for the last few years. We are a commercial company and we will not be looking for any grants from the council."
Converted for the new archive on 30 June 2000.Some images and formatting may have been lost in the conversion.
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