Halifax regional council should reject a community association's proposal to buy and convert the former St. Patrick's-Alexandra School site into affordable housing, says a city staff report released on Friday.

The newly formed North Central Community Council Association wants to turn the old building into a site for affordable housing and community hub. In the short-term it would act as an incubator for non-profits and arts groups.

The group is made up of the MicMac Native Friendship Centre, the North End Community Health Association and the Richard Preston Centre for Excellence.

They're offering to buy the lot for $3.7 million, financed through a loan from Housing Nova Scotia. The community association has already provided a $185,000 deposit.

Instead, city staff say council should sell the surplus building at market value, about $5.2 million according to a Colliers assessment.

According to the report, staff has three main concerns. HRM would be expected to keep the property during the development agreement negotiations, which comes with ownership risks such as holding costs.

The researchers are also worried about how the group would operate the building on a daily basis.

The report then raises serious concerns about the state of the building and says the community association might not be able to bring it up to building codes.

"Without acquiring additional financial capacity to upgrade and operate the property, the building could remain vacant for an indefinite period, resulting in further decline of the state of the building," reads the document.

Council still has to vote

Margaret Casey, board chair of the North End Community Health Centre, doesn't agree with the city's assessment. She says her group has also sent in engineers and architects.

"Their assessment was entirely different. The school was occupied by children until 2011 and it can't possibly be in need of — I think of $7 million — that HRM says it needed," she said.

"I think that the company hired by HRM was looking probably at — and I'm just surmising here — at a pristine end product. We wouldn't be looking at that. We'd be looking at something that certainly would meet code standards but it wouldn’t be the latest top of the line thing. We wouldn't need that."

Casey says their proposal of a self-sustaining centre would provide employment and run programs directed at helping at-risk people in the north end.

"We're not standing in the way of development. We see this is as a way of including these vibrant communities in the city," she said.

Coun. Jennifer Watts represents the area. She says she hopes council will reflect on what the group could bring to the north end before they vote on it.

"We really need to be looking at supporting housing, supporting economic job generation, supporting the types of strong community centres and hubs that will help support our communities and provide alternatives for people in our community to be integrated as successful participants," she said.

Casey says the report is a blow, but not the end.

"I just feel so strongly against this. The thing is, this is a once in a lifetime opportunity for this community. If this doesn't happen there will be dispersal of these residents to who knows where," she said.

"That sense of community will be gone."

The building has been marred in controversy. The Halifax Regional School Board declared the school surplus in 2008 and made a deal to sell the property to a developer. Several community groups challenged the move in court and a judge struck down the deal in September 2012.

Halifax regional council will discuss the report on Tuesday.