City of Newcastle will use the proceeds of selling three civic buildings to fund a $9.5 million upgrade to the Newcastle Ocean Baths pools.
The Newcastle Herald understands the council expects to receive more than $10 million when it sells the heritage-listed Fred Ash building, Clarendon Hotel and Bennett & Wood Limited building.
The Fred Ash building is slated for tourist accommodation, while the two adjoining buildings in Hunter Street would retain their existing uses.
If councillors approve the move, the money from the sale will fund the long-awaited restoration of the dilapidated ocean baths pools and surrounds.
The council completed a $4 million upgrade to the Merewether ocean baths pools and surrounds in 2014.
It called for expressions of interest from the private sector last year in redeveloping Newcastle Ocean Baths on a 21-year lease as a commercial restaurant and gym, but the move met with strong community opposition.
The council said in February that it had received no suitable expressions of interest but would commit to funding the baths restoration after forming a community "reference" group to guide the project.
It is understood the $9.5 million from the building sales would restore the pools and surrounds but not the ocean baths pavilion, which could cost another $10 million.
Friends of Newcastle Oceans Baths spokesperson Penny Maxwell said she welcomed the move to fund the work.
"Everyone can agree the baths themselves need some TLC, so we think it's great that they're getting on with the job of doing that and not waiting for community consultation to finish, because everyone agrees work is good for that and should start straight away," she said.
"We are just really cautious when they use the word restoration are they meaning it in its true sense.
"We would still want to make sure that didn't mean commercialisation, especially no gyms, function centres, anything like that.
"But, of course, we want restoration of the area and remediation of the baths themselves and the surrounding area, and we want to maintain those gorgeous open-air change rooms."
Deputy lord mayor Declan Clausen said in a council statement on Thursday that the city's asset committee has endorsed the sale of the buildings contingent on allocating the proceeds to the baths work.
"The poor structural condition of the baths is also well known and cannot be delayed for any reason," he said.
"While the impact of restrictions to limit the spread of COVID-19 has significantly impacted on council's income this year, with the sale of these properties there is money in the bank to get the restoration of the baths under way, possibly by the end of 2020," he said.
The council was using the Fred Ash building to house administration staff before moving to Newcastle West last year.
It sold the nearby City Administration Centre for $16.5 million to Syrian billionaire Ghassan Aboud for a five-star hotel.
Council chief executive officer Jeremy Bath said the sale "completes City of Newcastle's relocation from the former civic precinct to the new CBD in Newcastle West".
"Should the council support the sale, then Blue Door and the Clarendon Hotel will continue as is, and the Frederick Ash building will likely be converted to tourist accommodation," he said.
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