Preston City Councillor is expected to decline an offer from Farmgen founder Simon Rigby to buy Preston Bus Station.
In a detailed report to councillors published on Friday, the cabinet was recommended to decline the offer from Rigby and negotiate with Lancashire County Council to build a new bus station at the site.
The council said Rigby's proposal was "not in the best long-term interests of taxpayers". The local authority also questions whether the bus station would be retained or developed as promised by Rigby.
Rigby set up Warton-based anaerobic digestion plant operator Famrgen after making £25m in December 2010 through the sale of his 10% stake in Spice, the publicly listed water infrastructure services company he founded in 1996, to Cinven for £251m.
Meanwhile, Lancashire County Council has set aside £8.3m to build a new bus station in Preston in partnership with the city council.
Cllr Peter Rankin, leader of Preston City Council, said in a statement: "The cabinet are meeting on 21 March to formally consider Simon's proposal. As a council we have to act in the best, long term interests of taxpayers and the people of Preston. Selling the bus station for £1 might save the council money in the short term but it guarantees nothing.
"There can be no guarantees imposed on the future use of the building as a bus station, nor on future investment in the building.
"The major risk is that, for whatever reason, anyone who owns the bus station building could at some point simply decide not to operate it as a bus station anymore. That would leave Preston without a functioning bus station and no money or land to build a new one.
"There is simply no getting away from the fact that the current bus station building needs major investment. To bring the bus station up to modern day standards the costs, which have now been independently checked and verified, are between £17m and £23m.
"Simon's initial proposal sees investment of up to £2m immediately, which would pay for some repairs and improvements.
"We would like to thank Simon for his proposal and the time he has taken to put it together and discuss it with us. He like many people is a lover of the bus station building and wants to keep it.
"However, we have to think long term and what's in the best interests of Preston. The £8.3m guaranteed investment from Lancashire County Council, set aside in their capital programme, for a new bus station for Preston appears to be the best option.
"It would not only improve the City Council's financial position, doing away with the near £300,000 annual costs of keeping the current building running, but would also provide improved and better services to the people of Preston.
"It seems to be the only reasonable and sensible decision to take."
In December 2012, Preston Council took an in principle decision to demolish Preston Bus Station.
The bus station building currently costs taxpayers £297,000 a year to run and is in need of major investment.
Initial costings in a report commissioned by Lancashire County Council, were that refurbishment of the current bus station would cost somewhere between £17m and £23m.
These figures have now been independently verified by Preston City Council, in a report by the Tom Lucas Partnership. In January 2013, a written proposal from Simon Rigby was submitted to the Council, seeking to buy Preston Bus Station for £1. Council officers have carried out a detailed appraisal of Simon Rigby's proposal. This will now be considered at the Cabinet meeting being held on 21 March 2013 at Preston Town Hall.