Plans for a dual occupancy at the Mambo Wetlands site in Salamander Bay have been scrapped.
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Port Stephens mayor Ryan Palmer lauded the decision to withdraw the development plan, which would have fallen in the wetlands precinct.
The proposal for the land along Port Stephens Drive had faced strong community opposition since it went public.
The council confirmed in a statement that the development application had been withdrawn.
Cr Palmer said councillors had listened closely to their constituents.
“Myself and many of my colleagues campaigned during the recent election on a platform of protecting our valuable environment,” he said.
“Port Stephens Council staff have been outstanding in the way they have dealt with this DA.
“There has been a huge amount of pressure from outside sources, but their transparency and their consultative and patient approach has seen the community's interests well served.”
Kathy Brown, part of the residents group that formed to fight the development, said the DA’s withdrawal was a “victory for people power”.
“Now we need to have Mambo brought back into public ownership,” she said.