A report detailing how Kiama Municipal Council plans to fund the $55 million redevelopment of the Kiama Hospital site will be presented to councillors next month as negotiations over the sale of the site continue with the area health service.
Kiama council plans to buy the 3.3-hectare hospital site from the Illawarra Shoalhaven Local Health District and build a new nursing home and hostel for the council's Blue Haven Aged Care Facility, replacing the current Havilah Place nursing home and hostel.
The council said a due diligence process that involved testing of the site for contaminants such as asbestos was currently taking place.
The proposed development would see all buildings on the hospital site demolished except for the heritage-listed Barroul House, which will be renovated and opened to the public.
The project has attracted an $8 million commitment from the NSW government through the $100 million Illawarra infrastructure fund, established following the lease of Port Kembla.
Kiama council said ratepayer funds would not be used on the project, with money coming through Blue Haven's reserves, loans to Blue Haven and federal government funds.
Kiama Mayor Brian Petschler said negotiations were also continuing over the subdivision of part of the site that would allow the health service to retain its presence.
Last month, the Kiama Hospital Auxiliary expressed concerns that plans for the closure of wards had not been properly publicised.
Plans for the site would need to be approved by the Joint Regional Planning Panel.
The council plans to start work in 2015.