Business partners Rick Pettit, a former councillor, Wayne McKeague and Paul Halford own the former Arthurs Point Tavern, which has been empty since 2008.
However, Mr Pettit told the Queenstown Times yesterday demolition consent for the former tavern had been granted and demolition might start "the week beginning 11 July".
The former tavern was closed down in 2008 and is in a state of complete disrepair, primarily due to vandalism.
The building, situated on Gorge Rd, was to be demolished by the men, with the land it sits on to be swapped with a road reserve opposite. The council would then realign the McChesney bridge, with plans to construct a two-lane bridge.
In 2009, the Queenstown Times reported the men intended to build a commercial development with plans to potentially include a tavern, apartments and a shop.
In a report to the council, project manager Lane Vermaas said one of the agreed tenets of the exchange was "both sites were to be clean of any encumbrance, which meant that JHL were to undertake the hotel demolition ...".
When asked yesterday, Mr Vermaas said he had spoken to Mr Petit about his intentions and while a "verbal undertaking" had been given for the demolition, he would not sign anything to that effect.
Cr Russell Mawhinney asked if that meant there was "no contract", Mr Vermaas replied "no".
"I don't think that's going to go down well," Cr Mawhinney said.
Cr Cath Gilmour said that "doesn't give any faith in the developer".
"It's an eyesore and it's unsafe. If he's not prepared to put that in writing, I don't think we should accept that."
Cr Simon Stamers-Smith said unless the developer agreed in writing to demolish the hotel, "I will not support any move ... to do the land swap".
Ms van Uden said it was "not within the realms of our authority to tell him to demolish the whole hotel".
Mr Pettit did have an obligation to demolish "a small corner of the building" to allow for the new road realignment, but Ms van Uden said she hoped he would "step up" and demolish the rest.
"What we have got here is a very clear message ... the hotel needs to be dealt with - it's an eyesore and its unsafe."
Crs Mawhinney, Gilmour and Stamers-Smith voted against the recommendation to sign the agreement with JHL.
When asked if he intended to demolish the whole building yesterday, Mr Pettit said: "Ah, yes, I do".
An "archaeological authority" on the building covered the historic part of the former pub and anything under the ground.
"As far as I'm concerned, I will take the building down and lift up the concrete slabs."
