The former Jacksons Landing shopping mall on Hartlepool Marina is proposed to be demolished by the council.
Hartlepool Borough Council bought the site in 2013 for £1.5m with a two-year interest-free loan from a Government growth fund.
The timing is right for the demolition of the structureReport of Denise Ogden, director of regeneration and neighbourhoods
The decision sparked controversy at the time among some councillors who questioned the impact on taxpayers if the council could not sell the land on and raised concerns that no specific use had been identified for the premises.
Council leaders insisted the sale will help regenerate Hartlepool and forms part of proposals for the wider area.
The five-acre Jacksons Landing site, which has been empty since 2004, is identified for ‘transformational development’ in the Hartlepool Regeneration Masterplan with the potential to create new fit for purpose landmark buildings that the council says can act as a catalyst for the regeneration of the town.
But in papers released on Friday, the council says keeping and converting the existing building is unlikely to bring about such transformational benefits or maximise the site’s potential.
A report of Denise Ogden, the council’s director of regeneration and neighbourhoods, states: “Removing the existing building offers the opportunity to re-launch the waterfront as a visitor destination and change people’s perception of the area.
“Therefore, the timing is right for the demolition of the structure.”
The council’s Regeneration Services Committee, will meet on Friday, July 22, to consider three options proposed for the building.
Officers are recommending councillors vote to demolish the building but keep its raised concrete floor at a cost of £40,000.
The other options are to knock the building down and remove the concrete floor plate at an additional cost of £35,000, or to keep the building and continue to search for a developer.
The report states: “Option 2 is recommended with start on site after 19th September 2016 following the We Are Family event that will be using the building the previous week.”
It adds £4.75m of Local Growth Funds has been applied for through the Tees Valley Combined Authority for the waterfront area which includes Jacksons Landing.
A development brief is being created to try to attract private sector investors and a national hotel operator is reported to be in talks with the council about developing part of Jacksons Landing.
A council spokesman said: “A report relating to the possible demolition of the existing Jacksons Landing building will be considered by Regeneration Services Committee on Friday July 22.
“Officers are recommending demolition as a way of making the site more attractive to potential developers – in line with the Hartlepool Regeneration Masterplan which identifies the waterfront as a key area for securing future prosperity and jobs for the town.
“Demolition would represent the next stage of the development of our waterfront following the recent arrival in Hartlepool of the National Museum of the Royal Navy.
“Our focus now is on shaping the future of Jacksons Landing in a way which complements and builds on that.
“If councillors give the go-ahead, demolition of the existing building will run alongside the development of a detailed masterplan for the site. It is proposed that demolition work should start after the We Are Family event in September and there will be further consultation on options for the site in the autumn.
“The cost of demolition is expected to be £40,000 and it is proposed to fund this using money that has already been put aside by the council to underwrite the original interest-free purchase loan that is due to be repaid in October next year.”