A small town on the edge of the Yorkshire Dales could trade in a greenfield site to a supermarket chain in return for a new school, nursery and playing fields.
A crowded public meeting in Settle heard arguments put by Booth's supermarkets, and three rivals with different plans for other sites. Craven District Council's planning committee will reach a decision on March 17.
North Yorkshire County Council inherited the Bond Lane site in Settle, designated for a primary school, from the West Riding after local government reorganisation in 1974.
It has since been used as a playing field for Settle CE voluntary-controlled primary school, 10 minutes' walk away, and for a small children's playground.
The council does not have the cash to replace the school and did not qualify for replacement funds in the last government bidding round.
Bernadette Jones, head of policy and planning for North Yorkshire council, explained to the public meeting last Friday that the council had, in effect, to get government permission to raise a mortgage, which had not been granted, or use existing assets by selling land and property.
The Victorian school is on a restricted, hilly site with cramped classrooms with a small playground; the hall is used as a nursery for three half-days a week.
The school roll of around 130 is projected to rise so that another classroom will be needed, with no space to build it.
And in order for the school to qualify for the new government nursery voucher scheme for four-year-olds, it will need to allocate the hall for five half-days a week.
"The county council's position is very clear," she said. "It is only interested in disposing of part of the Bond Lane site if it means that it will be able to replace the school.
"If permission is not granted, the site will not be sold to Booth's and the position will be as it was previously."
The Department for Education and Employment said it welcomed private finance being made available to local education authorities for building projects. It did not know if this would be the first deal of this kind to be struck.