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Project MotorHouse figurehead Janet Fielding has hit out at the Thanet District Council's decision to flog Ramsgate's West Cliff Hall.
The building, which supports the main road to the harbour and the first 40 metres of the West Cliff Promenade, is a "problematic site", Ms Fielding says.
A survey, which Project MotorHouse jointly commissioned with TDC in 2014, showed that the steel frame needs extensive repairs due to corrosion.
Project MotorHouse has been battling to take over the building and transform it into a community space.
Last year, the building was put on the council's disposal list, with officers seeking expressions of interest to develop the site.
"Who on Earth would buy Ramsgate's West Cliff Hall?" Ms Fielding said.
"Every time it rains, water pours into the building causing yet more rust.
"Our trustees have always said they will not take on responsibility for the building unless they are confident that the frame can support the road and promenade.
"And back in 2015, TDC acknowledged that the frame is its responsibility."
Residents of the West Cliff believe it is "simply not suitable" for auction, according to Ms Fielding.
"Terry Painter kindly brokered discussions between MotorHouse and a few developers," she added.
"It wasn't a surprise when these developers concluded that the site is simply too problematic to be a commercial proposition.
"In addition to the structural issues, there is no parking at the top of the cliff, not even a loading bay.
"A developer would have to put in a lift down to the port level.
"It is in a conservation area. It isn't suitable for housing.
"You cannot build above the promenade level and the site isn't big enough to compensate by spreading horizontally.
"What is worrying the residents is that TDC will allow someone to buy the site for a nominal sum who will then landbank it in the same way they did with the Pleasurama site."
The former theatre and concert venue will go under the hammer at auction later this month.
Its freehold guide price is £100,000 plus.
Auctioneer Kevin Gilbert said: "There might be many directions in which this building could be taken.
"Of course all consents must be obtained prior to any work starting.
"The premises are accessed through a sunken garden passing under the West Cliff Promenade before opening onto a terrace with views over the marina and harbour."
It is to be sold on Monday, October 29 at the Clive Emson conference centre at Kent County Showground in Detling.
Thanet District Council has been contacted for a comment.