Kiama Municipal Council has given the green light for a proposed bottle shop on Manning Street, despite concerns over the liquor outlet's proximity to Kiama High School.
Kiama councillors voted 5-2 to approve the development application on the former newsagency site.
Cr Dennis Seage spoke passionately against the staff recommendation to approve the liquor outlet, saying "nothing good can come of this".
"I represent a lot of people who are opposed to this application," Cr Seage said. "I'm very disappointed with the outcome.
"This will be located within a school zone ... I think it will have negative social implications.
"Kids congregate in that area, senior high school kids frequent the takeaway shop next door and I think it is a very unhealthy exposure to young people."
Before making a decision, councillors were presented with a 51-signature petition opposing the bottle shop, but this was countered by a petition of 300 signatures collected by the applicant, Sal Saleh, who also runs the neighbouring general store.
Cr Neil Reilly said the council had legal parameters that it had to work within and believed any rejection would result in the council losing in the Land and Environment Court.
Greens councillor Andrew Sloan pointed out the social impact of the outlet would be further examined as part of the liquor licence process.
Cr Sloan said the bottle shop could prove convenient for people on the south side of Kiama and the applicant's intention to feature local wines could have benefits.
In the end the council voted 5-2 to approve the liquor outlet, with conditions attached, including installation of a CCTV system and a closing time of 8pm rather than 9pm.
Councillors Neil Reilly, Andrew Sloan, Kathy Rice, Mark Way and Gavin McClure voted in favour, with councillors Dennis Seage and Brian Petschler voting against.