Government documents suggest selling off land along the waterfront at Lake Illawarra is an option.
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This is despite a Planning Department spokesman stating "the site is not for sale".
In December, the department launched a registration of interest (ROI) process "to identify potential future uses for the site".
However, the language used in the ROI document clearly shows that selling the land is on the government's mind.
Throughout the document Property NSW - which manages the state's property portfolio - is identified as "the vendor".
The document mentions an objective behind the ROI process was "develop a divestment strategy" for the land.
Elsewhere it explicitly stated the reason for the registration process is "to gauge the interest of developers, tenants and investors to identify information in relation to the acquisition and the subsequent development of the property".
A department spokesman said the land wasn't for sale, but the registration process was geared towards "testing the market value of the site".
"One possible outcome of the process could be the sale of the land," the spokesman said.
"The ROI documents indicates what we would be looking for from prospective stakeholders in this case.
"The same document also makes reference to 'tenants', indicating a potential outcome could be a leasing arrangement."