Eurobodalla Shire Council has voted to lease out the Batemans Bay Community Centre from July 1, 2021.
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The decision was made at the council meeting on Tuesday, December 8.
SEARMS Aboriginal Housing Corporation is one of two lease candidates.
Those councillors in favour were Rob Pollock, Mayor Liz Innes, Maureen Nathan, Jack Tait, Lindsay Brown and James Thomson.
Those against were Phil Constable, Pat McGinlay and Anthony Mayne.
Community groups such as U3A, arts groups and Meals on Wheels opposed the plan, saying there were no suitable alternative premises for their members.
Cr Constable felt the centre should not be leased until the Mackay Park Arts and Aquatics Centre was built for community groups to relocate to.
The council amended its fee structure for other venues so groups which relocated would not incur higher costs for six months.
"This gives them a more gentle time to transition," Cr Thomson said.
Mayor Innes said it would allow groups to "test the waters" at the shire's alternative facilities.
During public forum, before the meeting, Cr Innes said SEARMS said it would not to exclude anyone from using the facility and would collaborate with the other organisations.
"I was reassured by Kim Sinclair from SEARMS that they have the intention to retain as many of those community organisations in that space as possible," Cr Innes said.
Cr McGinlay strongly opposed the lease.
"I am fearful," he said.
Cr McGinlay said the community feared dislocation, disruption, loss of social cohesion and resilience.
"I can't see how I could possibly vote on anything that would result in existing users being denied their current levels of access of what I consider a purpose-built community centre, in a central location, which provides excellent accessibility, flexibility, lovely parking ..." he said.
Cr McGinlay said SEARMS considered sub-leasing to other groups.
"New parties they are considering leasing to would dislodge or make it even more difficult for existing renters to use that facility," he said.
However, Cr Innes said: "It is council that will determine any sub-leases."
General Manager Catherine Dale reassured councillors that anyone leasing the centre would only be able to sub-let to not-for-profit groups.
"It wouldn't be council's intent for the main lessee to sub-contract out to any group except ... a not-for-profit community group," Dr Dale said.
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Dr Dale now has delegated authority to negotiate with SEARMS.
Cr Mayne congratulated SEARMS' for its presentation and said both candidates did "incredible work" for the community.
However, he leasing the centre to yield additional income had a downside.
"The real downside is that we have 15 groups who are the core and heart of the community and this is raising real concerns with them," he said.
"Why are we doing this?
"I get it that it is giving us a little more cash to fill the coffers that are being created and the concern of Mackay Park.
"We have a gap, and need to find out how to fill this.
"I think ultimately, we as a community lose here.
"We are splitting our community."
He said he would foreshadow a rescission motion.
Cr Pollock said he was initially "uncomfortable" with the proposal.
"I thought it was rushed," he said.
"I believe now, there is an opportunity for all of these groups to work together with council."
He said council was obliged to continually review how facilities were used and that community groups would have options.
"We are dedicated to helping everybody have the best way forward," he said.