Three years after the Island Affordable Housing Fund saved the historic Denniston House in Oak Bluffs from demolition, it is applying for a permit from the Oak Bluffs historic commission to raze the building.

Housing fund executive director T. Ewell Hopkins confirmed this week that the fund is applying for the permit to accommodate potential buyers who have expressed interest in the property.

A public hearing before the town historic commission on the demolition permit application is set for Nov. 10 at 4:30 p.m. in the Oak Bluffs Library.

After a failed planning effort to convert Bradley Square to a mixed-use residential and commercial complex that would provide studio space for artists and also house the headquarters of the Martha’s Vineyard chapter of the NAACP, the nonprofit housing fund decided in September that it could no longer responsibly shoulder the financial burden of the property. An eleventh-hour fundraising attempt by the NAACP to rescue the property in August also failed, and the next month the fund declared that Bradley Square would be placed on the market for sale.

The asking price is $975,000 for the Masonic avenue property which includes three lots, one of them the Denniston House, the site of the first African American church on the Island.

Mr. Hopkins said the new move to obtain a demolition permit stems from the desires of potential buyers who do not want to retrofit the outdated building.

“Since we’ve begun the process of selling it we’ve had several buyers that have expressed concern about the uncertainty about what can and can’t be done with the property,” he said. That uncertainty, Mr. Hopkins said, can affect the price.

The fund paid $905,000 for the property in 2007, under the leadership of a former executive director, following an aggressive fund-raising effort that raised about $200,000 over a period of a few days. The fund has been carrying a $750,000 mortgage on the property since then. A recent bank appraisal put the value of the property at between $700,000 and $800,000.

In 2008 Oak Bluffs voters agreed to devote $400,000 in Community Preservation Act funds to the affordable housing component of the $5.3 million project. Mr. Hopkins said the fund used about $50,000 of the money, mostly for architectural and permitting expenses. The remaining unused CPA money now will need to be rescinded at town meeting before it can be reallocated.

If the sale of the property fails to provide a profit, Mr. Hopkins said the town stands to lose the money it has already spent on the project.

“I’d love to pay the town back,” he said. “I’d love to pay all the contributors to Bradley Square back, but at the end of the day that may be lost money. It’s only going to come from the price of the sale.” He continued:

“There has been no appreciation on that property. It’s been a significant cash strain and I think it has also caused us to lose some community support — support that I’ve been diligently working on regaining. We were overly aggressive at an over-aggressive time.”

If the building is eventually demolished, Mr. Hopkins suggested there are other ways to preserve the spirit of the Rev. Oscar Denniston on the Island. The Martha’s Vineyard Museum has already saved artifacts from the house; what remains is the structure which once served as a mission for Portuguese immigrants and a place of worship for the Island’s burgeoning African American community at the turn of the century.

“The question is what’s important? What happened in that building or the building itself?” he said. “The fact that minorities on this Island found a place of worship and came together and gave each other strength, that’s important, and that can be preserved in the hearts and minds of our young people as a part of the curriculum in the school system. That to me is preservation. It would be difficult if what happened in that building were lost. I would be pained by that. Keeping the old building? In itself? Doesn’t preserve anything in my opinion.”