Residents fear more than half a leisure centre site could be sold off for housing.
Up to £16 million will be needed to regenerate the crumbling King Alfred leisure centre in Hove.
Brighton and Hove City Council planners believe the best way to raise the money could be to allow developers to build homes on part of the prime seafront site.
They say 40 per cent of the new homes would have to be affordable housing to meet Government guidelines.
Worried residents say it could mean up to 150 flats and houses would have to be built to meet the cost of the project.
They have asked the council to tell them exactly how many homes would have to be built there.
People living near the King Alfred said they were no wiser after a meeting with Chris Mortimer from the council's major projects team.
Sophie Curtis, of Vallance Road, Hove, said: "He tried to be helpful but he could not give us answers to our questions.
"To raise £16 million and take into account the affordable housing, we reckon a developer would want to use 60 per cent of the site and build between 120 and 150 homes.
"That is far too many and would affect what happens to the leisure centre.
"We could end up with the existing building being refurbished rather than getting the new facilities everyone wants to see there."
She said the council should look at other forms of paying for the redevelopment, including residents' bonds, sponsorship or going into partnership with a major commercial organisation.
A council spokesman said: "We don't yet know how many homes will be required. As we announced on January 21, we're appraising three options, which are an entirely new building, refurbishment or a combination.
"These will be presented to a public meeting of the King Alfred steering group on March 19.
"We will show three scales of development required to fund each of the three options. The public will be consulted on these."
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