The NSW government will build a new sport and recreation centre in south-west Lake Macquarie, but not with taxpayer funds.
Acting sports minister Geoff Lee said on Thursday that Origin Energy would "100 per cent" be footing what the staff union expects to be a bill worth tens of millions to replace the Myuna Bay centre.
The drawn-out saga of the centre's abrupt closure and mothballed status finally came to a head on Thursday when the government confirmed the site would be permanently closed.
More than 250 days after the centre was shut due to the risk nearby Eraring Power Station's ash dam posed in the event of a major earthquake, Mr Lee joined Lake Macquarie MP Greg Piper at Myuna Bay to announce the decision and future plans.
Staff and community hopes of seeing the popular centre reopened were quashed with the return of a review that had assessed the risks in relation to the usual activity on the site, which included multi-night sport camps, water-skiing competitions and recreation events.
Mr Lee said the long-awaited review had concluded there was an "intolerable" risk to human life if the ash dam wall ruptured in the event of an earthquake and it was "unacceptable" to resume normal operations.
He said the government had therefore decided to construct a new centre, which will be the first built in NSW in decades, on "waterfront" land owned by Origin Energy in the "local area".
"We understand the sport and rec centre is an integral part of the Lake Macquarie community and fast-tracking a replacement is our priority," Mr Lee said.
"A new centre will be purpose built to accommodate the same activities as the current facility including direct access to the lake for watersports."
Lake Macquarie MP Greg Piper said a new centre was ultimately the best outcome for the community given the Myuna Bay site, which had been hosting school camps for almost six decades, could not be reopened.
"A second independent report has come back and unfortunately it recommends that the original centre cannot be reopened," he said.
"But we've been able to negotiate an agreement that will deliver a new state-of-the-art sport and rec centre, as well as deliver compensation to affected parties, protection of the original site, and options for staff."
Staff were told on Thursday morning they would be offered voluntary redundancies or could relocate to another Office of Sport centre.
Mr Lee said they would be given "priority" opportunity for employment at the new centre when it opens.
A leaked Origin Energy document shows the centre could be built a few kilometres away at Lake Eraring.
However, Mr Lee said a site was yet to be confirmed.
"We've been talking to Origin about sites that are potentially going to be able to be used, we've narrowed it down to a shortlist," he said.
"We've got to have all our ducks in a line before we come out and announce it."
The planning, design and construction of the centre is expected to take at least two years. The acting minister said the government would not be funding the centre.
"What we've got to do is get it right," he said. "So that we have the right planning [and] get the right building, so it can be used as a multi-purpose centre and something we're very proud of.
"We'll assure that it will be a like-for-like centre and I'd even hope for it to be better. It's a fantastic opportunity.
"Origin have agreed to fund it 100 per cent."
The Office of Sport will likely be handed a 99-year lease on the chosen site.
Mr Lee said Origin's commitment to fund the centre came after negotiations in the past fortnight.
There were no Origin representatives at Thursday's press call, but a spokesperson later told the Newcastle Herald the company would fund a new centre.
"Origin will pay for a new sport and recreation centre and this will be built on a nearby site that we own," the spokesperson said.
"We have identified a number of land parcels and have provided these to the NSW government for consideration."
The Origin spokesperson said it was not yet known how much the centre would cost.
Myuna Bay Water Ski Club and the Morisset Rotary Club, which both had a presence at Myuna Bay, will also be compensated for the impact of the closure.
Mr Lee said the water ski club's access to Whiteheads Lagoon would be subject to future negotiations.
"Part of the plan is to be enable the ski club to have access to the water," he said.
Origin will "revegetate" the existing centre's land and it will be returned to the community, Mr Piper said, adding it would not be sold off for other uses and would likely remain a reserve.
The centre's closure, initially slammed by the ski club as a "knee-jerk reaction", has cost the government millions.
Wages for staff on paid leave and security contracts engaged since March, along with lost revenue from bookings that would have been taken over the past eight months, are understood to total more than $4 million.
Mr Lee said the government would seek compensation from Origin for at least the staff wage bill.
"I understand Origin has agreed to compensate for the lost wages," he said.
Troy Wright, the assistant general secretary of the PSA - the union representing Myuna Bay workers - said a new centre would likely cost "tens of millions of dollars".
He complemented the Office of Sport's interactions with staff, who have been offered voluntary redundancies or relocation to another sport and recreation centre of their choosing.
"At this stage, the Office of Sport seem to be committed to doing the right thing by the 15 to 20 employees that are directly affected," he said.
"They are offering them every available option ... with the right to return to the new centre when it's built."
Mr Wright said the union's only concern was the most recent review had not been publicly released.
"We are very curious to see this new report," he said.
"We think it's absolutely vital that the community and employees should be able to see it, to ascertain whether this risk a realistic one. The decision should be transparent."
It was a concern shared by Labor spokesperson for sport, Lynda Voltz, who reiterated her concerns about the timing of the closure in March in relation to the yet-to-be-determined application to expand the ash dam.
"Origin Energy has wanted the Myuna Bay [centre] site and originally tried to purchase it through NSW Treasury when they purchased the power station," she said.
"There is a lot of scepticism that the report on the dam wall at Eraring coincided with a proposal from Origin Energy to increase the dam.
"It now appears Origin Energy has got exactly what they want and the sport and recreation camp is to go."
Mr Lee and Mr Piper said the dam expansion, which the NSW Department of Planning has recommended for approval, was unrelated to the centre's closure.
Ms Voltz was also critical of the government for not releasing the most recent review documents and for not providing more detail about the future centre.
"The government however won't come clean on where the new site is, nor how much Origin Energy has agreed to pay to cover the cost of the rebuild," she said.
"We have heard this 'like for like' replacement argument before when the government demolished Parramatta Pool, for which there is still no replacement and three years later on not one sod of dirt has been turned.
"If the Member for Lake Macquarie has such a cosy relationship with the Berejiklian government, why hasn't he asked them to release all the information surrounding the Myuna Bay [centre] and Eraring Dam in full."
Mr Piper said he would be pushing for the latest review to be publicly released, while the sports minister's office said the government was still assessing whether it would release the documents.