The Cross Inn in Devon has been empty for several years and plans to restore it have been hampered.
Mid Devon District Council says it wants to encourage active lifestyles.
Letch, a father of five who was born without arms, was a teacher, a campaigner and appointed an MBE.
Work on the new changing rooms at Active Tiverton is due to begin on 21 April.
Council will review 70 cases where it discovered it overcharged tenants who were later evicted.
Mid Devon councillors say the scheme recognises the "invaluable support" carers provide.
The changing rooms will be out of action for a month.
An estimated £1.5m will be needed to repay about 1,200 tenants.
Council says it is raising membership prices by less than it was advised to by consultants.
