The developers behind the proposal to build two nine-storey apartment towers behind Dapto Hotel have managed to convince planners that their multi-storey complex can coexist with the pub's heritage.
At a planning meeting held last week, the town planner and architect of the development defended their plans, which Wollongong City Council had recommended for refusal.
One of the main issues the council found was that the towers would overshadow the old pub, especially during mid-winter.
However, town planner Luke Rollinson argued that this was not a problem, as the pub's main operating hours were at night, when solar access was not possible anyway.
"The density and heights permitted at this location will result in overshadowing no matter what we do - if it's three of four storeys, or eight storeys high - and the hotel owners are the proponents in this instance and they haven't raised any concerns about how this would affect the operation of their business," he said.
"Trading of the hotel is during the evening periods and the outdoor courtyard the council has referred to as receiving sunlight is a covered space anyway."
He also noted that the council's zoning of the site made it clear that it was suitable for a development of this kind, despite comments from the council that the towers would be "out of character" with the rest of Dapto town centre.
"It's clear that a high density development of some kind is earmarked for this location," he said.
"The hotel operators and owners should be afforded the right to develop their site in consisting with the [council planning] provisions that are in place".
The Wollongong Local Planning Panel, which is made up of four independent town planners, agreed with the developers and deferred - not refused - the proposal.
Developers have been asked to resubmit plans, adding extra information about how they will preserve the history of the pub and some design changes.
The panel also asked that the developers consider building a second basement level for parking to "assist in activating the walkway, reducing the perceived bulk and height of the building and thereby improving the compatibility of the proposed development with the existing character of the area".
Developers have been given 28 days to provide the extra information.