HILLSBOROUGH - While town officials seek $5,000 in fines and investigate living conditions at the 19th-century Colonial Inn, an advisory board could decide tonight if part of the building can be torn down.

The Historic District Commission has delayed a decision on owner Francis Henry's demolition request since June to give him time to present documents about a southeastern section's historical value and detailed plans for its replacement.

The town received a letter recently from Mitch Wilds, with the State Historic Preservation Office's Restoration Services Branch, who said he did not find any reason during an Aug. 9 tour of the 153 W. King St. inn to oppose demolition.

The section has been expanded and altered over time and "is quite deteriorated with no early finishes or features apparent," Wilds said in a letter to Hillsborough planner Stephanie Trueblood. Only one original wall from the earliest addition in 1894 survives, he said.

The section highlighted for demolition includes three small- to medium-size one-story rooms that lead to a rear exit and may have been a kitchen and related rooms or storage. It is not visible from the street.

"It is my opinion that these later secondary additions have not acquired historic significance in their own right, and their demolition would have little or no impact on the overall integrity and significance of the historic Colonial Inn building," Wilds said.

Henry said the section, along with the front of the building, has major damage, and renovation has uncovered significant sewer problems. Combined with runoff from a mishmash of roofing structures, the issues could pose a serious threat to the foundation, and a demolition would help locate the source and extent of those problems, he said.

Since paying $1.3 million for the inn in 2002, Henry and the town have struggled over the pace of renovations and how the inn could be used once the work is complete.

In 2008, Henry was charged with violating the town's demolition-by-neglect ordinance and was given more than a year to complete 12 required repairs. In 2010, the town filed a complaint in district court, alleging that Henry had finished only half the work. That action resulted in a $100 fine being assessed against Henry for every day the work wasn't finished.

Town officials said Henry has completed exterior work on the inn's western side. In August, Henry proposed building the eastern section and adding a gable or shed roof. He now says his desired plan is to replace it with a brick or slate patio enclosed by a brick wall and landscaping.

The Hillsborough Town Board in the meantime has decided to move forward, voting in closed session Sept. 12 to start collecting fines amassed since the ruling. While it could be higher, Mayor Tom Stevens said the town limited the fine to $5,000.

"As a town, we're committed to due process and committed to fairness for all parties," Stevens said. The goal is to "make sure the building remains standing for those that come after us."

The board also has launched an investigation into a neighbor's complaint that Henry and his daughter are living at the inn even though it doesn't meet minimum housing standards. Henry has said he would like to make the inn a private residence.

Planning Director Margaret Hauth said tenants typically use the ordinance when a landlord isn't keeping the property up to a certain level.

In this case, it's being used because "the neighborhood feels like someone is living in a house that's dangerous to him," she said.

Stevens said the board delayed the investigation since October 2010 to give Henry time to make repairs and entertain inquiries from potential buyers. At least three people have asked about buying the inn, Henry said.

Because the inn is in the town's historic district and protected by the National Register of Historic Places, the town cannot tear it down. The board has directed town staff to inspect the property and bring the results of the investigation to a public hearing.