SHOALHAVEN City Council is facing an investigation from the Local Government Department over its sale of land for a hotel, retail and apartment development near the council offices in Nowra.

And at the heart of the investigation are concerns council sold land it was not legally entitled to sell, as it was classified as community land.

And while the Local Government Department is talking about an investigation, council is facing trouble on the other side of the ledger with developer Huscorp talking about taking action.

Local Government Department deputy director General Ross Woodward said the department asked council to table a letter at its meeting last night seeking information regarding council’s expressions of interest process.

Mr Woodward said his department had looked into process and concerns had been raised.

“Those concerns include the fact that Huscorp hadn’t presented a development proposal and were not included in the original grouping of expressions of interest,” he said

“When expressions of interest went out for that land there were five groups that put in expressions and that didn’t include Huscorp at the time.

“We have concerns about council’s process because we don’t understand how they suddenly decided to deal with Huscorp.

Mr Woodward also called for more information from council because it appears to be in contravention of the Local Government Act, because it did not have the right to sell the land.

“That land is classified as community land and council is prohibited from selling it under the Local Government Act,” he said.

“If it’s classified as community land it has to be rezoned through a community consultation process in order to be sold.”

He said if that fact was confirmed it made other parts of the dealings irrelevant.

“We’re not accusing them of anything but it appears they haven’t followed proper process.

“You can’t sell the land so why even go down this path when you have legal advice that tells you it is community land?

“This process is not as transparent as we think it should be.”

Huscorp director Afram Hanna recalled the expression of interest process, at which council asked what developers needed to make a hotel viable.

“What we said at the time was that a hotel on it the land alone can’t work unless we get some retail, commercial and about 84 apartments.

“You’ve got to make it to an impressive scale and quality that people will want to have and see there,” he said.

“Following our detailed submission and presentation to council, we were advised that our concept was the preferred option for council and we were formally awarded the tender.

“I’ve never seen the other responses, but the council’s property steering committee said they were extremely impressed by our design and said we have the most impressive concept and would be making a considerable investment which would complement the entertainment centre.”

Negotiations began, “Then half way through the process they said they were not even sure they can sell us this land.

“They mentioned the land may be classified as community land. We couldn’t believe it.

“That would mean we had been wasting our time for the last 18 months or so because they had no authority to sell without reclassifying the land as operational.

“We said we’ll stop now, cut our losses and council can cover our costs,” Mr Hanna said.

We then inserted clauses in the contract to address the community classification issue.”