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Pierremont Hall in Broadstairs could be up for sale.
Thanet Council’s Cabinet will decide whether to opt for asset disposal at a meeting next Thursday.
The process would involve associated Broadstairs buildings such as the Town Shed.
Cabinet member for financial services and estates Cllr Rick Everitt was concerned that the sale could lead to misinterpretation.
He said: “Pierremont Hall has iconic status in Broadstairs so this is a sensitive issue.
“The fact is we cannot engage in a process with Broadstairs and St Peter’s Town Council to purchase the site without an asset disposal process.”
With the Grade II building’s status as an asset of community value Broadstairs and St Peter’s Town Council have six months to make a bid.
Cllr Everitt said: “If there is no satisfactory deal at the end of six months then nothing else can happen without coming back to Cabinet.
“We are not making a decision next week, the six-month period will end no earlier than August and by that time the decision may even fall upon a different council, where the problems began.
“We hope that people realise we are giving this asset a chance to remain publicly instead of privately-owned and we are working with the town council to identify issues and understand its status.”
Cllr Everitt claimed that a narrower focus for the town council could be beneficial.
He said: “Maybe town council ownership will be better for the building, Thanet District Council has a lot of assets to maintain and struggles financially.
“We don’t know their ability to bring this building up to standard - nobody has the information yet - but we will talk through the options and can consider whether to go ahead with it on our part.
“The town council has best consideration but we cannot say that we will never entertain approaches from anywhere else.
“We could not gauge best consideration in terms of a deal with the town council without listening to what other interested parties are saying.
“We don’t have to accept their offer and if someone offered us a lot for the building it would be difficult to turn them down.
“But Broadstairs and St Peter’s Town Council have six months in which no one else can acquire the building and hopefully they can take it forward in the way they want.”
Interim director of community services Ged Lucas said: “It is an old building and requires an awful lot of maintenance.
“It would cost £130,000 to repair part of the central heating system and electrics but that isn’t near the figure in general.
“The rental income is approximately £12,000 but it depends from year to year.
“But it would cost substantially more to maintain and issues with the building need to be addressed urgently.
“Disposing of the park or war memorial is not part of this.”
The town council and Broadstairs Folk Week are the remaining tenants in the building.
Head of economic development and asset management Edwina Crowley said: “We are still collating information on the property and we have supplied temporary heating to make tenants as comfortable as possible.
“Former tenants are happy where we chose their accommodation in the Kent Innovation Centre.
“But we are all trying to work together and the council recognises the public interest.”
This follows an online petition started last week by Thanet South MP Laura Sandys urging TDC to “stop the Broadstairs sell-off”.
Almost 400 signatures have been collected urging the council to stop sales or negotiations of assets in Broadstairs until they get a mandate from the people of Thanet.