CAMS Wharf residents have been urged to "maintain their rage" as the Raffertys Resort developer Iris Capital looks to attract a five-star, eight-storey international hotel chain to the site.
To appeal to that kind of operator, the proponent needs approval from the state government to raise the maximum allowed building height from 8.5m up to 36.5m on part of the site.
And, in front of a gallery of disgruntled residents, Lake Macquarie City Council moved to request a gateway determination from the Department of Planning and Environment to change its own rules.
Neighbourhood representative Peter Swan said residents had not been properly consulted, and asked the council to take a more critical view of the proposal.
"Council should be, and needs to be, facilitating quality development that enhances the area without undue impacts on the existing owners and residents," he said.
"The development currently proposed by Iris Capital is not that type of development.
"This is not the right location for high-density, high-rise tourism facilities, the access road to Raffertys Resort is already choked at busy times and the parking available is already inadequate.
"The Iris Capital development shows the demolition of all buildings on the land that they own, including the main resort pool complex and the construction of a tavern, resort and function centre, eight two-storey townhouses, three four-storey apartment buildings with a total of approximately 70 units and an eight-storey hotel."
There is no development application before the council to build a high-rise hotel at this stage, all the proponent has asked is that the council raise the maximum building heights to facilitate such a project.
If a development was approved, the proponent estimates it would increase the population by 40 to 50 permanent residents and 174 visitors.
A move by deputy mayor Adam Shultz to defer the decision for 28 days of community consultation was shot down - with other councillors arguing that consultation would have no real impact given it isn't part of the formal process.
Instead, councillor Jason Pauling argued that residents should wait for if, or when, the gateway determination goes on public exhibition when their voices can be appropriately heard.
"Where there have been other contentious matters the fury of the initial objection falls away fairly quickly, so if the gallery and those residents who are opposed to this truly believe in it, they need to maintain their rage and come back at the right time when consultation allows it," he said.
"Time and time again there's been an initial outpouring of objection but very quickly that falls away, and in a backhanded way the outcome tonight helps support that because it gives people the opportunity to keep their powder dry so they can influence the process.
"Rather than us being a sympathetic council, offering lip service, we talk for 28 days, stall it for three months and it goes ahead regardless, and none of that energy mattered."
Iris Capital's proposal argues that without the approval to build higher, international operators won't be interested.
It argues that a future development would stem the city's accommodation constraints and leverage its tourism strengths - with the capacity to increase visitors by 76 per cent.
The developer estimates a major hotel would generate more than 500 jobs during construction, 51 operational roles and increase visitor units by 121, along with 20 additional dwellings on the site.
Speaking on behalf of Iris Capital at Monday's meeting, Stephen Barr said the proposal is just the first step of many.
"From here if this does proceed and goes to the department of planning, they would have to endorse that along with state agencies and the community would be involved in further consideration and consultation through that process," he said.
"The council has identified the significant opportunities available for Lake Macquarie around tourism, in particular the economic activity that brings, employment and unmet demand and the opportunity for more people to come and enjoy Lake Macquarie."
The proposal to amend the building heights and change the additional permitted uses so that only tourism is allowed at 2 Lorikeet Loop will go to the Department of Planning and Environment for a gateway determination before it is put on public exhibition.
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