Selected parcels of community land in the Kiama municipality have been identified as surplus to Kiama Council and its community's needs.

The council's revenue subcommittee had determined a parcel of land on the corner of Fern Street and Willawa Avenue, used for overflow parking for the Gerringong Uniting Church, had the potential for three residential lots.

A piece of land adjoining the western end of Michael Cronin Oval at 60 Blackwood Street, Gerringong, was also identified for residential lots and another parcel is located at a small reserve off Irvine Street, Kiama.

When voting in April, Kiama councillors endorsed staff's recommendation to start the re-classification/re-zoning process, which will enable the council to publicly exhibit the proposals and seek any comments.

As part of the process a public hearing is required.

"The recent review of local government highlights the need for councils to be financially sustainable in the longer term if they are to remain independent," council's general manager Michael Forsyth wrote.

In May, council resolved to move ahead with plans to sell the community land, also including part of Iluka Reserve at Kiama Downs.

Funds generated from the land sales would support capital works and infrastructure.

Mayor Brian Petschler said earlier this year that this process would help make the council financially sustainable and preserve its autonomy.

"Grants are declining, prices are increasing and rates are restricted," he said.

However, Margaret Sharpe and other Gerringong residents have disputed suggestions the church land wasn't adequately utilised.

"This land is used by the public and church groups for overflow parking and for children's outdoor activities," Mrs Sharpe said. "The church parking occurs on most Sundays, and for weddings and funerals.

"If this was not available and cars had to park on the adjoining streets it would cause traffic hazards; Fern Street and adjoining streets are not very wide.

"It's a popular spot for dog walkers and people having a rest."

Fellow Gerringong resident Alma Macpherson shared her concerns.

"Once we have the loss of a lovely green space, what's to stop that happening to other reserves?" she said.

Mrs Sharpe said this land had an important history.

"It was a quarry where the stone was cut for the building of the church, now the Uniting Church which was opened in January 1884, the Minister's residence, now Nestor House and the foundations of the Church Hall.

"It would be a shame to lose this green space and also lose the view of this historic church."