Sheffield is one of the UK's most important cities for modern architecture, says Owen Hatherley, and we need to take action to stop it being destroyed.

The Jury's Inn is the sort of building that Sheffield has been producing a lot of since the 1990s. Mediocre, over-scaled, it could have been built absolutely anywhere in the UK at any time since 1997. So imagine my surprise to find inside scuzzy paintings of what the city used to look like. In the toilet was a framed painting, in a vaguely punky fanzine style, of the Tinsley Viaduct and the Blackburn Meadows Power Station, a massive concrete monument demolished, to cultish lamentation, 10 years ago.

I was in town for an event called the Sheffield Modern Weekender, a three-day celebration of what is – or rather was, until the bulldozers and the developers got there – the most important city for modern architecture in England outside Oxbridge and London.

Make no mistake, that's what Sheffield is. From the 1960s until the 1980s, its housing estates – whether high density and urban at Park Hill and Hyde Park, or bucolic like Gleadless Valley – were internationally famous, as were public buildings like the University's Arts Tower and Library, the Crucible Theatre and the Castle Market. What made them so exciting, at the time and since, was their embrace of the city's glorious topography, with rolling hills that turn almost every view into a panorama.

What to do with this enthusiasm?

When I first visited the city nearly a decade ago, that legacy was cherished only by a tiny minority, and the local government and various regeneration agencies were bent on erasing as much of it as they could. Park Hill and the Crucible, both listed, were given defacing renovations to try and make them look more like what Tom James calls "half-decent new-build in Manchester".

Visiting a few times a year since, I've seen that marginal enthusiasm for the city's so-called eyesores build up to the point where it's now something of a cottage industry.

A whole weekend of events about how great Sheffield modernism is (was?) felt like the argument had almost been won, albeit too late for buildings like the amazing pop-modernist cornucopia of Castle Market, the most recent casualty of the city's compulsive self-harm. But what to do with this enthusiasm?

The Weekender was very similar to the very successful Radical Essex events in the flat suburbia of the south. It aimed to raise awareness of the city's legacy through publications – four essays bound in a folder, a leaflet with photographs of Sheffield's modernist churches, and of course totes and badges. There was a day of talks in the lovely Festival of Britain interior of the Methodist Victoria Hall, plus some site-specific walks and tours. These included a bike tour around the city's modern buildings, many of the best of which are in the hilly suburbs, a situationist-inspired "drift" of the city centre, a tour of the Crucible, and a series of artworks immortalising demolished buildings like Castle Market, the Town Hall extension and the "Wedding Cake" registry office. There was even a performance of Terry Riley's classic minimalist composition In C in the perpetual-motion paternoster lifts of the Arts Tower.

Along with the architectural historians, speakers included Martyn Ware, an ex-member of the Human League and Heaven 17, who was raised in the now-demolished brutalist Broomhall Estate, and is still enthusiastic about futurism and socialism. There was also writer Lynsey Hanley, who compared seeing the epic sweep of Gleadless Valley to the sound of the Warp Records techno classic LFO.

The city's best modern buildings are being clad in tat

The weekender was optimistic and fun, rather than nostalgic and curmudgeonly. It brought art together with architecture, by engaging with buildings as a real presence rather than pictures on a screen.

But there was no escaping two facts – the first was that, aside from the Arts Tower and some of the churches, the buildings in question are treated like trash, and the second was that there is almost no architecture in the city of the last 30 years that comes even close to its quality, specificity and imagination. An interesting steel car park by Allies and Morrison, a block of studios by Feilden Clegg, and Pringle Richards Sharratt's Winter Gardens and Millennium Galleries are about it. And of those, only the Winter Gardens is really worthy to stand with the city's 60s and 70s buildings.

So why is there still such a disconnect? Sheffield is, after all, a city with a huge student population, plus a relatively high population of artists and what today get called makers. Yet its buildings are utterly dominated by banality - offices "to compete with Leeds", lowest-common-denom retail, moronically flashy student hubs, and interminable barrel-scraping prefab student flats.

Worse still, the city's best modern buildings are being clad in tat (the forested towers in Gleadless Valley are now black and lime green, and without their balconies), and its trees, in a place that proudly considers itself the greenest big city in the country, are being cut down en masse and replaced with saplings, as a result of a mind-bendingly obtuse PFI deal.

It is no exaggeration to call this a disaster

Much of the blame can be left at the way that the old drivers of the city's architecture and planning, the local government and the university, are forced to work as a cash-strapped boosterist agency and a mega-business, respectively. But letting the creatives run things has also had an impact.

Look at Park Hill. Five years after Urban Splash's reconstruction of one part got nominated for the Stirling Prize, it is still one quarter high-end flats, and three-quarters dereliction.

A lot of proposals for sorting out Sheffield's third-rate architecture focus on giving more power to its communities of artists and designers. But these are the very people that Park Hill was remodelled for, at huge public expense. Hundreds of council tenants were dispossessed and a public asset was turned into an unsuccessful speculative investment vehicle.

The S1 Artspace in the estate now has an exhibition on the Bauhaus, while creative startups are moving into the units of the renovated block. Yet most of the building has been derelict for nearly a decade, in a time when council waiting lists have sharply increased and homelessness become endemic. In a particularly horrible irony, the proximity of Warp Films has made the building's empty shell a ubiquitous urban decay set for film and TV.

Current estimates suggest that this massive complex, which took three years to build, will take around 20 years to reconstruct for its new clients – if there's not another financial crash that is. It is no exaggeration to call this a disaster. And it was done so it could be sold to us, the design enthusiasts, the modernism fans, the makers and the creatives. Of course it wasn't our fault – we didn't set the agenda, New Labour and Coalition governments did, and they didn't half hate council housing. But we are implicated.

If Sheffield's enthusiasts want to change the city for the better, the answer might lie not in creativity and collaboration with developers, but in anger and civic action.

Photo of Park Hill is by Daniel Hopkinson.