The Hunter and Central Coast Regional Planning Panel has approved the demolition of the former Myuna Bay Sport and Recreation Centre.
The $2.8 million demolition project will include the removal of all above ground structures, decommissioning of existing services, remediation, minor site regrading and general site works.
The panel acknowledged opposition to the demolition plan, including from Lake Macquarie City Council, however, it determined that the public interest was best served by clearing the site.
"While the loss of the facility on the site is recognised, the public interest is best served in ensuring risk to users is minimised," the panel said in a statement.
"To this end the demolition, remediation, earthworks, environmental protection works, and securing of the site to ensure that it is not publicly accessible is on balance an appropriate response to the site constraints and suitability."
The site was closed in 2019 due to concerns that Eraring Power Station's coal ash dam could collapse in the event of a 5.7 magnitude earthquake.
The NSW Office of Sport finalised a settlement with Origin Energy in 2022 over the closure of the centre.
Seventeen speakers made submissions about the centre's future during a teleconference last week.
Several spoke about the facility's value to the broader community and questioned the need for the closure.
"The representation from the waterski club sought an amendment to the application to allow time for further negotiations regarding access to the site and options for continued use of the waterski facilities," the panel said.
"Council's broader position is that it is not in the public interest to close the facility and there is a lack of a viable alternative."
Lake Macquarie mayor Kay Fraser previously said the community had been "absolutely dudded" after she was told a replacement facility would not have overnight accommodation or be "like-for-like".
That same month, the council staved off a decision to approve the site's demolition. Instead, it voted to seek permission from NSW Lands and Property Minister Steve Kamper to refuse the demolition application.
The decision was referred to the panel because the council recommended refusing the development application to demolish it.
