A Shellharbour City Council report listed a lack of parking and flooding issues among the reasons to reject restaurants and tourist related facilities such as hotels being located at Reddall Reserve, Lake Illawarra.
The report to Tuesday night's Shellharbour City Council was in response to a council resolution to explore opportunities in the popular location.
A planning investigation considered there were limited opportunities to provide such land use in the location, although a small number of sites might warrant further, more detailed investigation.
The meeting resolved to receive and note the information contained in the report, prepare an economic and market assessment for the area to determine if restaurants and tourist related uses are feasible in the location and what land area and floor space requirements would be needed to support them.
The council also resolved that a further report be prepared on the outcomes of the economic and market assessment of the area and whether further investigation and development of planning controls were warranted.
Shellharbour Mayor Marianne Saliba said it was never her intention to see a hotel in the area.
"The accommodation side of it was not the tourist type opportunity I was talking about," she said.
"I was talking about stand-up paddle boarding or surf schools running out of a shop, surf shops, cafes, restaurants and those sorts of things.
"It would be great to have those retail and commercial opportunities there that can create employment for our residents and also provide opportunities for our community and visitors to our local area to maximise that great asset we have got in Lake Illawarra.
"I would hate to see that area going to waste. I certainly don't want anything there that is in conflict people who live in that local area."
Council initially resolved to prepare a report after a mayoral minute on March 16 which indicated Reddall Reserve was growing in popularity as a destination for the local community and the wider region for leisure and recreation.
The mayoral minute said there was potential to attract longer stays if additional food and tourist related facilities were located close to the lake foreshore. Planning controls do not presently allow such uses.
The report to the council last night said there was a high degree of redevelopment and investment in the area for residential purposes, and potential conflicts between residential amenity and tourist related uses.
There were also land constraints, such as flooding, which would also impact on car parking provision, limiting the ability to successfully integrate restaurant and tourist related facilities such as hotels.
The broad introduction of restaurants and tourist related facilities was not recommended, the report said.
However, it was felt a further assessment of such opportunities on vacant land and land containing ageing housing stock could be carried out, along with an assessment of the impact of environmental constraints such as flooding.
At the July meeting of council it was resolved to approve a $100,000 budget reallocation to prepare a concept design and seek development consent for the upgrade of the Reddall Reserve Kiosk. It was felt there was no current demand or community business interest in making it a cafe or restaurant.