Proponents of the planned $250 million Tallawarra housing development will be able to build a road and bridge on environmentally sensitive land, despite zoning laws prohibiting their construction.
A NSW Planning response to TRUenergy's vision for the 560-hectare site near Yallah said several major components of the project were prohibited under the site's zonings, including a proposed bridge to span Duck Creek.
The department said the bridge and accompanying road were not permissible under the E2 conservation zoning covering that section of the site.
The report said the proposal would be unable to be approved until the items were deleted from the plans.
However, the report immediately went on to explain how TRUenergy could navigate planning laws to ensure the bridge and road could still be built.
The department said TRUenergy could enter into a planning agreement with Wollongong City Council to build the bridge on the council's behalf, meaning the work could proceed without requiring development approval.
The move flies in the face of the aim of the E2 zoning, which is to protect areas with high ecological value.
However, a NSW Planning spokesman this week said it was "entirely appropriate" for the department's report to outline the potential paths TRUenergy and the council could take to resolve the issue through future development applications.
"The department's report states that the bridge will be an important link between different components of the site's employment area and help this area become regionally and state significant," the spokesman said.
"Under our proposed way forward, Wollongong council would be responsible for self-approving the bridge and in doing that it would need to consider whether the bridge will have a significant environmental effect."
The spokesman denied suggestions the move could diminish the value or effectiveness of the zoning.
A Wollongong council spokesman said it would support the Duck Creek bridge proposal and would pursue a planning agreement with TRUenergy to have it built.
"[A planning agreement] will require the submission of design details for the council's review and approval and require all relevant environmental issues to be satisfied prior to and during construction," the spokesman said.
"This planning agreement will be publicly exhibited and reported to a council meeting prior to finalisation."
The council said it considered the use of state planning infrastructure legislation to enable the bridge and road to be built in the environmental zone a "legitimate planning mechanism".
TRUenergy's plans for Tallawarra include 1010 residential lots, a 200-dwelling retirement village, a primary school, 40 hectares of commercial and industrial land, 16 hectares of retail development and 360 hectares of dedicated conservation land.
NSW Planning has challenged the permissibility of the retirement village and the school, saying neither is allowed in the business zoning that covers their selected sites.
The Planning Assessment Commission will decide whether to grant concept approval for the proposal before handing it over to the Planning Minister to be signed off.