Oyster Bay Town officials are trying to decide whether they can afford to spend an estimated $5 million to restore the 332-year-old Mill Pond House or replace it with a replica at a rough cost of $3 million.

It's a politically sensitive decision. The two acres the town purchased four years ago from developer Charles Wang for $1.9 million contain one of the oldest structures in Oyster Bay hamlet, and the town board declared it a landmark protected from demolition in 1976.

Town Supervisor John Venditto said that, regardless of whether the house is restored or replaced with a replica or a building of modern design, having the Oyster Bay-based environmental group Friends of the Bay move into the building "would be the highest and best use we could make of the property."

Patricia Aitken, the group's executive director, said "being in Mill Pond House would afford us the opportunity to provide education and encourage stewardship of our beautiful harbor and the upland areas surrounding it."

Town historian John Hammond said the earliest part of the house was built in 1680 for local gristmill owner John "Mill John" Townsend. It remained in the family until about 1920, and then there were several owners, one of whom turned it into a gift shop.

The building, empty before Wang bought it, is deteriorated from leaks in the roofs and standing water in the basement that rotted support beams. It has been heavily altered with additions and the removal of a front porch.

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The town hired Newport Engineering of Oyster Bay to estimate the cost of stabilizing and rebuilding the house. Owner Nicholas DeSantis said the estimate formulated last year with preservation consultant Joel Snodgrass, of Huntington, was $1.2 million for a mixture of historically accurate restoration and modern materials to level the building and replace the roof, windows and siding.

Based on that estimate, town planning Commissioner Frederick Ippolito believes it would cost $3 million to build a replica incorporating historical details that can be salvaged: the fireplaces, two-piece Dutch front door, original upstairs floor planks and ceiling beams held together by wooden pegs.

He estimates a historically accurate restoration would cost between $4 million and $5 million, in part because the structure would have to be jacked up.

But preservation groups said the town should not decide without more detailed estimates.

Alexandra Wolfe of the Society for the Preservation of Long Island Antiquities said, "For $3 million, it would appear that something closer to restoration should be possible."

After hearing the reaction of the preservationists, Venditto said he believes "the cost of a historically accurate restoration will be prohibitive. But if for $3 million we can have some kind of reasonably accurate historical restoration, I wouldn't rule that out." He said the town will commission a study to determine "the cost of a historically accurate restoration to see whether or not it makes sense."

If it doesn't, Philip Blocklyn, executive director of the Oyster Bay Historical Society, said that before demolishing the house, "they should try to find a private buyer who would be willing to put $5 million into it to restore it. Trying to salvage some of the materials from that building would be the next best option."

As for the town tearing down a historic structure it had designated as a landmark, Blocklyn said, "I don't think it's a good precedent."