In 2004, the Ocean House was not permitted to open because of code deficiencies; the original hotel ceased operations in 2003 and was sold. The community learned in March 2004 that a developer from out of town planned to raze Ocean House and build five homes in its place, so organizers began a campaign to save the building and preserve the site's public oceanfront access and beach. These organizers included representatives from Preserve Rhode Island, Rhode Island Historical Preservation, and Heritage Commission, as well as the National Trust. Another buyer was found who deemed it economically and physically unfeasible to make the building functional and code compliant, but he promised to rebuild it from the ground up. The original building was demolished and a new facility constructed on site.