THE first stage of the controversial Calderwood Urban Development Project has been approved in the Land and Environment Court.
Shellharbour City Council says the ruling is expected to significantly reduce the long-term impact on services.
Last week's decision allows for Lend Lease's plans for 4800 dwellings and 50 hectares of mixed-use land in the Calderwood area to be developed during the next 23 years.
Commissioners declared they would uphold Lend Lease's appeal against the rejection of the first stage.
However, orders will not officially be handed down until August 29 after "consolidated conditions of development" are filed by the parties involved.
The overall Calderwood project was granted concept approval by former Labor planning minister Tony Kelly in 2010. Despite this, Lend Lease's plans were dealt a blow last year when the proposed first stage, comprising 231 residential lots and 120 medium-density dwellings, was rejected by the independent Planning Assessment Commission.
The PAC cited the project's inconsistency with the Illawarra Regional Strategy, which prioritises West Dapto, as well as potential flooding as among reasons for refusal.
Lend Lease appealed the decision and in February the PAC performed an about-face that Kiama MP Gareth Ward called a "dramatic backflip" just weeks before the court hearings.
Following the submission of "expert advice", the PAC said it was now satisfied that the stage-one project may be approved subject to appropriate conditions, including those relating to flood mitigation works and contributions towards local infrastructure.
Land and Environment Court commissioners handed down their judgment, saying the main issue to be resolved by the court was infrastructure contributions.
Shellharbour and Wollongong councils had long opposed the proposal, deeming it economically, environmentally and socially unsustainable.
The commissioners said they did have concerns about flooding and experts were requested to examine the issue. As a result, proposed amendments to conditions of consent were agreed to by Lend Lease.
"Given the PAC had given one of its strongest repudiations of a development that I have seen … That it has turned around like this is disappointing," Mr Ward said.
"One positive is the Section 94 plan Mr Kelly was prepared to accept was far below what the court determined the applicants will have to pay. [This means] the Shellharbour community is shouldering less of a burden."
Shellharbour councillor and Greens candidate for Throsby Peter Moran also expressed disappointment.
"The situation we are faced with now is not quite as bad as it could have been - but it's still pretty terrible," he said.
Lend Lease NSW communities general manager Simon Basheer said they were committed to working in collaboration with both councils to enable the 320-home stage-one of the project to progress.
"The Calderwood project will deliver much needed new housing, infrastructure, community services and facilities to the Illawarra region," Mr Basheer said.
Shellharbour Mayor Marianne Saliba said Lend Lease paying increased developer contributions was a "big win" for Shellharbour City.
"Depending upon the outcome of the negotiation process for this first stage, the developer can expect to pay more than double what they were hoping to pay," she said.
The developer must now substantially upgrade its flood mitigation works.