The hall formerly used by the Australian Air League in Aqua Flora Park in Sandringham has been demolished to make way for green space.
Bayside Council said the hall, on Clareville Avenue, was no longer being used and was not able to be repurposed.
"Council examined all the options for retaining the site and determined it was not feasible to refurbish the building, which required extensive work to bring it up to contemporary building and compliance standards," a council spokesperson said.
"The building will be demolished this month, and the area restored and prepared for open space use by the end of June."
Sandringham resident Kim Wood, whose home on Ida Street neighbours the park, said she thought it was "a waste of money" not to repurpose the building.
"Everyone I've spoken to thinks it should have been refurbished because it's very old. It could have been somewhere for women to go when they picked up their kids from the kindergarten [on the same block] or a men's shed," Ms Wood said.
"It seems like it could have been better used. Just because a building becomes abandoned, it shouldn't be a reason to pull it down."
Ms Wood, whose great-grandfather Amos Selmon (1831-1925) was a Sans Souci pioneer and built the house she now lives in, said she thought the old building in the park used to house the Sans Souci Girl Scouts and that it had historical value to locals.
"It seems the contractor who was pulling it down could just as well have done the work it required to pull it back up to standard," Ms Wood said.