Shellharbour City Council has confirmed it has exchanged contracts for the sale of a 42.25-hectare parcel of land at Tullimbar with the proceeds to help fund the $57 million Shellharbour City Hub project.
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In October last year, the council entered into an agreement for the conditional sale of the residential development site west of Albion Park for $13 million and the proposed purchase entered a "due diligence" period.
A council spokeswoman said the purchasers had paid a 10 per cent deposit on the property.
Last month some councillors and the Stop the Hub community group expressed concern the property had been sold through "a put and call option".
Shellharbour Mayor Marianne Saliba explained that a "put and call option" was a method used by developers where they subdivided a parcel of land, sold it, then used the proceeds to fund the next subdivision rather than buying the whole site in one transaction.
If the sale fell through, the land remained the council's to sell, Cr Saliba said at the time.
However Cr Kellie Marsh described the sale as "a joke".
"If I owned the property personally I wouldn't be asking someone to lay-by it and pay me down the track," Cr Marsh said.
"I did not support the sale ... I don't believe we have got the best deal for ratepayers and we should have all that money up front."
The controversial City Hub will be funded through proceeds from asset sales, Section 94 developer contributions and a loan for the balance. The proposed development includes council administration offices, a city library and museum, auditorium, council chambers, meeting rooms, a civic square and cafe.
Cr Marsh has expressed frustration that the council had spent almost $4 million on consultant fees for the hub project since July, 2011.
"This is a needless waste of money at a time we have a special rate variation to fund asset renewal," she said.