The proposed multi-use facility would feature a mix of art, tourism and cultural/heritage hubs spread across approximately 3000 square metres of land overlooking the spectacular Nelson Bay waterfront.

Vision for the grand plan - while still in its infancy and would require community, business, tourism and government support - is, according to TMA president Ian Farnsworth, to create a world class, publicly-owned cultural centre on the Tomaree peninsula.

"We have chosen Fly Point over Shoal Bay [Lodge] as a preferred site because of its beautiful location and known heritage and environmental value, comprising Aboriginal, pioneer settlement, WW2 contribution, marine park and floral gardens," Mr Farnsworth said.

"It has a central location for a community facility and has better options for management of risks including traffic, parking, land ownership, site size, venue location options, environmental impact, existing infrastructure maintenance costs, and financial viability.

"There is also the ability to build on established community facilities such as the nearby community arts centre (adjacent to Cultural Place) and performing stage (used for Christmas Carols and Australia Day celebration) which could convert into an amphitheatre, and has good accessibility with high passing foot and vehicular traffic. It is also close to Nelson Bay CBD, boating and tourist attractions."

Mr Farnsworth said that from his experience, most successful museums were set up as "multi-use" facilities and required significant community involvement.

"The aim is to establish a performing arts centre [400-seat hall with outdoor amphitheatre plus linked community space], multi-purpose art and exhibition galleries, commercial development [such as venue hire, cafe and art shop], interpretive services for National Parks, marine parks and visitor information, plus community societies, workshops and storage," he said.

"The integrated site would leverage off the known heritage and environmental value in addition to the military, heritage/cultural, marine and tourism history, which would encourage pay-to-see exhibitions and draw visitors and school children to the precinct."

He said that all new buildings would be state-of-the-art, while protecting the fabulous water views. He added that every effort would be made to limit tree removal and that for every tree cut down

"Ten new ones would be planted".

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To fund the project, expected to cost in the vicinity of $20 million, Mr Farnsworth said it would require extensive financial backing from all three tiers of government and that talks have commenced talks with Port Stephens Council.

"The next step would be to begin negotiations with other community groups and the residents of Port Stephens. An integral part of the museum project includes our proposal to promote protection of the satellite heritage sites of Tomaree Lodge and Fingal outer lighthouse and to keep them in public hands."

Peter Clough, coordinator of Friends of Tomaree Headland Group, which formed in 2019 with representatives from business, tourism, community, military, marine, historic, cultural and environmental groups, was cautious in his support for the bold plan.

"I believe it requires much more investigation and extensive community consultation as well as a master plan. Our focus remains on the future use of the Tomaree Lodge site, once it becomes vacant."

Tomaree Residents and Ratepayers Association said that while there was an opportunity for a state of the art museum, it was premature to settle on a location ahead of any state decision on the future of the Tomaree Lodge site and its future management responsibility.

"TRRA also recognises that the public open space at Fly Point is very much valued as a community asset and significant community consultation would be essential prior to any decision."

Marine Rescue Port Stephens spokesperson Ben van der Wijngaart said they did not support an exclusive two location museum proposal and discussions were premature.

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