The highly controversial block of land at 109 Foreshore Drive in Salamander Bay will remain operational with a potential to be sold for residential development sometime in the future.
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Port Stephens councillors voted 5-3 at the meeting on Tuesday night to retain the current classification, zoned R2, for the 557sqm waterfront property.
East ward's John Nell - supported by councillors Jaimie Abbott and Giacomo Arnott - failed in an attempt to have the land reclassified from operational to community land.
The decision means that the land, valued pre-COVID at $1.5 million, can be sold for residential development.
Cr Nell said that it would be a mistake for the council to sell waterfront land for potential development, particularly in light of the recent damage caused to homes due to sand erosion and extreme storm fronts.
Residents who were also opponents of the sale, chief among them being members of the Mambo-Wanda Wetlands Conservation Group and Soldiers Point Community Group, say that the block is used year-round by families, dog walkers, kayakers, fishermen and swimmers, and was an important green corridor for koalas and other wildlife.
Councillors in favour of retaining the land's operational classification say that the funds could be put to good use by the council, which has taken a huge financial hit during the coronavirus pandemic.
There was also the issue - if the council decided to change the land's classification to community - of the length of time required to have the land reverted to its current classfication. The council's corporate services manager told councillors that the process of having the land reclassified back to operational would take "two to three years".
The council had previously sought to use the money from the sale to fund the redevelopment of Tomaree Sports Complex.
In other council news from the August 11 meeting, the deferred item relating to the development application for 50 camp sites with amenities and kitchen on The Bucketts Way, Twelve Mile Creek, was withdrawn.