Staff said their view remained unchanged with the planning proposal not demonstrating strategic or site-specific merit. The matter is on the agenda for the council meeting March 20.

In its proposal for a 100-room hotel, built above the bistro area, the club requested the current height limit of 16metres was changed to 26metres.

In June 2023 council staff recommended against approval, and against sending it to the NSW Department of Planning and Environment for gateway determination but councillors unanimously resolved to send it to NSW Planning.

It was referred back to council, with no issues at the state level, and council put the proposal on exhibition.

The matter has polarised the community with multiple submissions received speaking strongly against, and in support of, the proposal.

Council said approximately two thirds of the 115 public submissions opposed the proposal. Many public submissions were of the view that the proposed height increase was not desirable either in Merimbula or on the specific site selected. Submissions were also received from the Civil Aviation Safety Authority (CASA) and the lessee of Merimbula Airport.

Council staff said the previous assessment of the planning proposal found the proposal did not demonstrate strategic or site-specific merit, provide sufficient justification for inconsistencies with relevant council land use and tourism strategies and NSW Government plans and guidelines, including the NSW Coastal Design Guidelines 2003.

"The recognised impacts cannot be adequately addressed through the development application stage," council staff said.

In support of the club's application, Club Sapphire CEO Damien Foley said there was a gap in the market for 4.5 star hotel which would allow the club to hold conferences and "bring a different type of visitor to town".

It's all part of our strategy to reduce our reliance on gambling," Mr Foley said.

Sites over 2000square metres in Merimbula can be considered for a building height increase.

Another developments which benefitted from the site specific rule was Robert Green's five storey development in the centre of Merimbula on Market Street, which councillors approved to go up from 13 to 18metres, against the recommendations of council planning staff. Staff recommended a maximum height of 16metres.