Uncertainty surrounding management of Lake Illawarra almost led Shellharbour councillors to reject a $200,000 grant for dredging works at the lake's entrance this week.
The Lake Illawarra Authority board was disbanded in July after the NSW government recommended the LIA be replaced by an estuary management committee led by Wollongong and Shellharbour councils.
However, the estuary management committee is yet to be formed.
Shellharbour City Council general manager Michael Willis said when the authority's board was disbanded, the powers of the LIA were temporarily placed in the hands of the LIA executive officer Brian Dooley.
Mr Willis said staff of the two councils had met representatives of the Department of Trade and Investment five weeks ago where he asked for a clear plan on how the transition would be managed.
Mr Willis said council staff would soon be appointed to a "transitional committee" to work through the issues of accountability and "apportioning the authority's assets" prior to an estuary management committee being formed.
In the meantime, council staff recommended a grant offer of $200,000 from the NSW government to dredge the lake channel and use the sand to "renourish" Warilla Beach be rejected as the project was supposed to be a joint partnership with the LIA.
The closure of the LIA meant the project's risk and responsibility would be transferred entirely on to Shellharbour council.
There was also "a high risk" the eventual cost would exceed the conceptual cost estimate, council staff said.
An attempt was made by councillors to defer making a decision on the grant offer. However, this was not possible as the offer expired on September 6.
In the end, councillors deemed the improvement works to Warilla Beach were important and resolved to accept the $200,000 "on the proviso that matching funding is also received from the LIA", although the likelihood of this happening would not be known until the end of the month.
Shellharbour Mayor Marianne Saliba said the NSW government had created "a terrible" situation in disbanding the authority.
"We don't want the lake's conditions and surroundings to deteriorate," Cr Saliba said.
"There is no estuary management committee in place and we have the former executive officer managing the authority, as such, as it gets wrapped up.
She said until the state government gave all the information needed, the council was stuck.