Looked through this a bunch again. If I follow corrrectly, the board and the property owners are separate sets of people. You like both. Neither is an instigator of the wrong-doing. Your working is not harmful to either group.

I don't get the sense that the property will be bought by the Center. Leased, yes? Either way, the city will continue to want the property even if the Center locates there. Even if the dissuasion of the president had not occured, locating there would present an on-going challenge to their operation. This is a legimate concern on their part. I'm guessing the center is a charitable organization(?) (Especially) as such, it would be a good thing to choose the situation that will best allow them to focus on that worthy work. So considering these things (as they should) it may not be simply a matter of spinelessness. It is not just a matter of physical location, it is full consideration of what is best for their enterprise in all aspects the property impacts. As you correctly state, the choice is theirs to make. And may involve more than meets the eye, and therefore it might be over-reaching to declare their moral standing based on this (because to do so denies they have any considerations for their enterprise outside of the one you are focused on - and they simply may not see it exactly the same way, ie. as straight up bullying. If they don't feel they've been bullied after all...and/or had other factors to weigh in that you might not be aware of...). I wouldn't write them off.

Guess it boils down to I don't see what would be gained by walking over it. If they have a good enterprise to house, it is good to help that and not presume too much about their decision making process. (I've been on a planning committee, and I'm sure all are like this in that we do discuss aspects and considerations that those outside the group are not privy to. It does not mean they are bad things. Also, things always seem simpler from the outside. Nothing underhanded about it, it's just the way it is.)

I think you are more valueable in than out. For starters because you care.