"The mural is quite cool, but the rest of the building is an eyesore."
Mr Riley said the runanga's immediate plan was to demolish the building and grass over the area, which could be used for markets, sports and community events.
He wanted the demolition sooner rather than later, before anyone could be harmed by the asbestos the hotel was thought to contain. The building was made of rimu with possibly some kauri and Oregon pine.
People would have a chance to suggest what they wanted on the site.
The runanga had bought the property as a social investment and a way of improving Ngapuhi's central town, not as a commercial venture.
The closure of the hotel and its pokies had already brought some benefits, in particular for people unable to control their gambling addictions. Very little money came back to the community from the pokies, he said.
Kaikohe Business Association chairman Steve Sangster said he hoped the site would be used to build a community asset.
"Something akin to Kaitaia's Te Ahu Centre would be great for the town," he said.
Artist Chris Wilkie, who is working on a series of murals at Marino Place, said he would like to see a living museum celebrating the town's Maori and Pakeha heritage and offering activities such as weaving courses.
The building was previously owned by colourful publican Zita Cameron. The rest of her Northland property empire was sold in a mortgagee auction earlier this year.