After nearly two years of legal disputes, George Lucas has finally pulled the plug on plans for his Museum of Narrative Art in Chicago, with the director now thought to be eyeing San Francisco or Los Angeles for his legacy project.

Blaming delays over a lawsuit from a parks group opposed to development along the city’s waterfront, Lucas said in a statement that he would be taking the museum to his home state of California, but did not name a specific location.

Los Angeles or San Francisco are the favourites for the new site, with both expressing strong interest in hosting Lucas’s legacy project when it was first revealed in 2013. At the time, Los Angeles mayor Eric Garcetti offered a site in Exposition Park, the equivalent to Chicago’s Museum Campus and home to the Los Angeles Memorial Coliseum. San Francisco mayor Edwin Lee also made a proposal to Lucas to build the museum on a 2.3 acre site owned by the Port of San Francisco, situated along the Embarcadero (eastern waterfront).

In his statement, Lucas directly blamed Chicago’s Friends of the Parks for suing to stop construction on what is currently a parking lot for the Soldier Field stadium, saying that “no one benefits from continuing [Friends of the Parks’] seemingly unending litigation to protect a parking lot.”

The disputed land would have hosted a 300,000sq ft (27,870sq m) museum, with 200,000sq ft (18,600sq m) of parkland improvements featuring theatres, a library and a public observation deck. MAD Architects designed the museum and Chicago architect Jeanne Gang designed the parkland, though it is not yet known if those plans can, or indeed will, be retained following a move.

Chicago’s mayor Rahm Emanuel, who was a strong supporter of the plans, called the failure to secure the museum a “missed opportunity” that would cost the city millions of dollars in economic investment, thousands of jobs and educational opportunities for the city’s youth.