Heritage practitioner Chris Richards told the Examiner he believed the concrete structure which was built in 1923 "to be of high heritage significance both to the local community and at a state level".

"The reservoir is located on its own title of land with access to a nearby public road and if sold through tender or auction the reservoir would make an ideal restaurant, office space or community centre," he said.

"I believe that that the reservoir, with its connection to the Chichester Dam and due the role it has played in the development of Raymond Terrace, would be of high heritage value."

Hunter Water would not be drawn on the immediate future of the water tower, which features a tank measuring 16m in diameter and has a capacity of 300,000 gallons of water.

A Hunter Water spokesperson said that a number of options were being explored for the future of the reservoir, which it says is located on Hunter Water-owned land and was decommissioned in April 1995.

"Hunter Water reviews disused assets across its area of operations, including Raymond Terrace. No decisions about the future of the site have been made and there are no immediate plans for its demolition.

"Hunter Water is committed to continuing meaningful engagement with the local community and relevant stakeholders as it explores potential options for the site."

ALSO READ: Council urged to reconsider housing plans for Boomerang Park

One of those stakeholders is Port Stephens Council, which is awaiting a planning proposal report to be presented at an upcoming council meeting on the future use of Boomerang Park, including that of seniors housing.

A council spokesperson said it had been notified by Hunter Water that the reservoir was no longer in use and was not required for the ongoing operation of water reticulation services.

"Re-use options for the reservoir have not been considered," the spokesperson said. "The reservoir is not a listed heritage item, nor is it located in a heritage conservation area. The surrounding council owned Boomerang Park is a locally listed heritage item identified on the Port Stephens LEP 2013."

Mr Richards said that the reservoir was commissioned shortly after the competition of the Chichester Dam Scheme in 1923, with water delivered to various part of Newcastle.

"At the time of its construction the Chichester scheme was considered to be a significant engineering undertaking and represents a major evolution in water supply technology. The scheme was responsible for opening up the Lower Hunter for major population growth. The reservoir is now surplus to Hunter Water requirements."

Another interested stakeholder is the Raymond Terrace Historical Society. Its president Ken Barlow said that the building was of important "historical significance" to the community of Raymond Terrace and that it should be preserved into the foreseeable future.

"Some years ago we had plans drawn up to transform the reservoir into an observation platform with coffee shop. We believe it would be an ideal spot for locals and tourists wanting panoramic views of Raymond Terrace while enjoying some refreshments," he said.

Mr Barlow said the group would be happy to revisit these plans.

Mr Richards said that there was too much at stake for Hunter Water to consider the demolition of the structure.

"Parts of the Chichester system are state listed including Chichester Dam, the Cipoletti Weir, associate dam buildings, the Tarro pumping station, the tunnel under the river at Raymond Terrace, and a working model of the scheme," he said.

"I believe that the whole scheme should be state listed including the reservoir, due to its engineering significance, the board's oldest source of water supply still in service ,and the role it has played in the development of Raymond Terrace and many towns within the Lower Hunter region."