A LEGAL battle is set to be avoided over the dilapidated Bonding Warehouse because City of York Council fears it wouldn't win.

Guildhall sources have told The Press that legal action over the Skeldergate building is unlikely because the authority's position "is not certain".

We can reveal details surrounding the negotiations with the building's tenants Lionel Davis and Keith Carby as council chiefs prepare to debate the former bar and restaurant's future at a crucial meeting on Tuesday.

The building has stood empty and derelict since it was devastated by flooding in November 2000, and has been the subject of protracted debate between the authority and the tenants, who have the Bonding Warehouse on a 50 year lease.

The Press reported, last week, how council leader Steve Galloway said the building could be on the market "within weeks".

Councillors who attend a meeting of the council's executive, on September 12, will be given the option of taking legal action against the tenants to force them to surrender their lease, or coming to a settlement with them.

Officers have recommended the second option be taken.

But Guildhall chiefs have told The Press:

The authority doesn't want a legal fight with the tenants because its position "is not certain"
The tenants turned down a £200,000 offer in 2004 to surrender the lease - asking for £400,000 and their legal costs
The council needs to clear at least £625,000 on any sale of the building - or face a deficit in capital receipts
And that either party can pull out of any sale if the building fetches less than a reserve price of £425,000 Coun Galloway refused to comment on any of the details when approached by The Press. But he moved to clear up speculation that the Grade II listed building was only being considered for conversion into residential flats.

He said: "Developers can submit bids - and subsequently seek change of use planning permission - for whatever they feel is appropriate and deliverable.

"Use as a restaurant certainly would be one possibility.

"Developers would have to bear in mind though that the building lies adjacent to elderly persons' accommodation and a compatible use would be required by planners.

"Its vulnerability to flooding without extensive works, is also a major factor.

"The residential conversion option was exemplified in the report as it was necessary to demonstrate to potential purchasers that there appeared to be a way of addressing the flooding issue, that was both affordable and which could be completed in a way that might not conflict with the buildings listed status.

"If this had not been demonstrated then the building would have been in danger of ending up as an empty folly."

Mr Davis said: "I just want to see the place developed and look as good as it should be."