A communication breakdown between the Hamilton City Council and a number of groups has seen keen buyers mistakenly eyeing up the ageing YMCA facility.
The council has said the building on Pembroke St is not for sale despite a number of interested parties inspecting the premises, valued at between $1.5 million and $2.5 million since before Christmas last year.
Among them was the Waikato Kindergarten Association with its chief executive Maree Stewart confirming members of its board went through the facility last week.
"For us it was an investigatory thing ... and I guess from that we are certainly interested in furthering our investigation into the property and that would mean maintaining the existing services," said Ms Stewart.
"There are important community services there."
But YMCA chief executive Peter Fergusson said it wanted to continue its long-term lease of the building which expires next year.
The YMCA is under pressure after the city council voted to remove its entire $90,000 operational grant from 2011/12.
It has objected to the cut and said it would affect the services it provides.
Mr Fergusson had hoped the YMCA would have received first right of refusal when embarrassed council staff on Tuesday confirmed to him that the property was "definitely not on the market".
"So yesterday was actually a revelation that we found out the building wasn't actually up for sale and they were interested in a potential long-term partnership."
Mr Fergusson said the YMCA was willing to invest in the building and its facilities, having spent $3.8 million on improvements to a North Shore YMCA recently.
He said the non-sale was good for a city that was "desperately short" of indoor sports facilities.
The council's finance and audit chairman Dave Macpherson yesterday told the Herald that staff initially put the YMCA on a list of assets for consideration to fund a proposed multi-purpose indoor sports stadium.
But the YMCA building was not removed from the list when the idea fell through.
"The point at which we canned the community recreation centre should have been the point it should have been removed from the list, and it wasn't."
"Staff put it on a list for consideration quite rightly initially because we would have needed funds for the new centre ... the kindy people tell me that is what sparked their interest and they shot off and did all this checking and everyone jumped the gun because of that."
Mr Macpherson said it was uncertain whether the council would sell the building in the future although the site is one of a number of facilities the council has said may be for sale in the next 10 years.
He said the council had a number of "tired and old indoor facilities" but it would have to look at making them work better.