In a letter to the chief executive of Derry and Strabane Council, David Sterling said the business case submitted by the UU makes no provision on funding the medical school from its budget.
Mr Sterling also drew comparisons with this UU project and one it had for the Springvale campus at a proposed cost of £71m which failed to materialise.
Mr Sterling’s letter was described as “grim reading” by a member of the council’s governance committee, Paul Gallagher.
In his letter, Mr Sterling warned: “The university is not proposing to finance the Magee medical school from within its own resources and significant ongoing finances will be required from Government if this is to proceed.
“As you are aware all public services are under severe budgetary pressure and we simply cannot spend money we do not have.”
Mr Gallagher, an independent councillor, said: “David Sterling’s letter makes for grim reading.
“We thought this was take-off time for the medical school but what concerns me greatly is that time and time again for the past 50 years, Ulster University has led Derry down a path where they made many promises but delivered nothing.
“This looks like another example of this. We as civic leaders in council need to draw a line in the sand and say either put up or shut up and then look at Plan B or even Plan C.”
Ulster University has previously said it planned to increase student numbers at Magee to 10,000 by 2020 but instead less than half of that are currently enrolled.
The Derry University Group lobby group is asking for consideration to be given to bodies other than Ulster University to establish a university in the city.
Garbhan Downey from Derry University Group said Mr Sterling’s letter spelt out the need for council to seek alternative partners to secure the future of third level education in Derry.
He said: “There is no positive gloss that UU or council can possibly put on the Sterling letter.
“The North’s top civil servant is casting major doubts over UU’s ability to deliver on big projects.
“It’s fair to say, his doubts are shared by the vast majority of people in the North West, who have given up on UU ever delivering for them.
“As its immediate priority, council must seek other partners such as the National University or Queen’s University Belfast to help it deliver the medical school for the region.”
A spokeswoman for the UU said it is working with a number of bodies to deliver the medical school.
She said: “Following cross-party political and health and social care support in 2016 for Ulster University’s Graduate Entry Medical School, the university has continued to proactively develop the project, working closely with the department and other relevant partners.”
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