Coastal Events CIC had a big interest in taking on the running of the chalets and spent many months on a proposal in order to get them ready to open this year.
But following recent negotiations with East Lindsey District Council they are not in a financial position to cover all the costs involved.
Patti Marson, co-director of the Coastal Events CIC, is disappointed that they have been unable to come to an agreement with the district council. She said: “Hearing that it is doubtful that the chalets will open this season would be a disaster for the area.
“It will be very difficult to get the beach huts up and running again after a big gap.
“We are very disappointed that we haven’t been able to sort out a deal with the district council after working for two months solid on a proposal.
“The council offered us the chalets for £1, but there are a lot more added costs involved and the huts would still belong to them.
“It means we couldn’t put our pledges of help into action and it is with great regret that we are not in the financial position to take all these costs on.”
Ms Marson added: “We are devastated as we have never been in this to make money or a profit. All we want is to safeguard the beach chalets for the future.”
A spokesman for district council said: “Following an approach from the Coastal Events Company the council entered into discussions with the company for a one-year lease for 15 of the chalets in Sutton on Sea for £1.
“Whilst we are surprised given recent discussions that the company has not accepted the proposed lease, we respect its decision.
“As a result it looks unlikely the chalets at Sutton on Sea will be available for hire in 2016. Since the Coastal Events Company announced its position, a further organisation has expressed an interest in the chalets.
“The Council will now open discussions with this organisation alongside exploring over the coming months the best long-term and sustainable option for the future of the beach chalets in Sutton on Sea.”
This group is the Sutton on Sea Residents’ Association.
District councillor for Alford and Sutton on Sea Stephen Palmer said: “I am deeply disappointed that a mutual agreement could not have been made between Coastal Events and the District Council to get the beach huts up and running this year, especially when local people are willing to put the work in.”
Sutton on Sea district councillor, Helen Matthews, said: “We are disappointed the project with Coastal Events CIC didn’t work out as we were working with them to facilitate a solution. We are still hoping to have some of the beach huts open this year but will need to talk with the newly interested group first.”