East Lindsey District Council has been accused of selling off land to “top its pension fund” amid fears houses could soon be built on The Wong.
The Wong Work Group (WWG) has been campaigning to secure the entire area as ‘green’ a community facility.
Residents backed their campaign in a referendum held last year.
However, the land is owned by East Lindsey District Council.
WWG chairman Coun Bill Aron has admitted ELDC want some form of financial return from The Wong.
Speaking at a town council meeting, Coun Aron said the district council could raise as much as £450,000 by selling part of the site for commercial or residential development.
However, Coun Aron stressed the district valuer had said that provided there was some financial remuneration, part of the site could be site set aside as amenity land.
Coun Aron said the WWG had progressed their campaign as far as they could and called on the town council to take the lead in future negotiations with ELDC.
However, newer members of the council said they did not know enough about the situation and needed more time to study a report drawn up by the WWG.
Coun Aron said he believed The Wong would be effectively split into three.
A third would be given over to development, a third to an extension of the existing car park and a third as amenity land.
He said the WWG favoured securing the amenity land on a long-term lease - similar to the one in operation on the neighbouring Stanhope Hall.
However, Coun Aron admitted the WWG could not take the matter any further.
He said an elected town council was in a much stronger position but stressed reaching an agreement would “be no easy task.”
Coun Aron stressed the WWG would continue to provide support and advice.
Town Councillor Maurice Lamb said he believed ELDC was selling off land at The Wong - and in Louth and Skegness - because “they need a few bob to top up their pension fund.”
The WWG has held protracted talks with ELDC, but the last meeting was an acrimonious affair and led to the resignation of one long-serving member of the WWG, Maureen Traves.
She accused ELDC’s representatives of being “downright disrespectful and rude.”