The Clutha District Council's hearings panel heard the resource consent application at a Taieri Mouth hearing earlier this month.
In an interim decision released this week, the panel, chaired by Clutha Mayor , has given the applicant a month to provide an altered plan to address those concerns.
The application attracted 31 submissions, of which 29 were in opposition.
Mr Hayes said the panel heard "compelling evidence" from Te Runanga o Otakou and Taieri Whanau about their relationship with the the coast in the location of the subdivision.
Their chief concerns included the development of housing, and effluent disposal in the area on the headland was "culturally inappropriate" and would detract from the mana of the waahi tapu sites on and beneath the headland.
They were also concerned about the loss of access over the headland during high tide, the potential for effluent to be discharged into a small stream, the loss of the "present vista" of Moturata from the Taieri Beach School and the loss of bird habitat.
But the panel agreed some form of rural-residential development was appropriate at the site. Mr Hayes said it then became a matter of what density and under what conditions that should happen.
Although the panel said its role was not to engage in the redesign process, it believed the plan should be modified.
"Accordingly, rather than determine this application at this point, the committee considers that it should offer the applicant an opportunity to consider [the panel's] findings and to submit a further design that addresses its concerns."
The revision should be done in consultation with local Maori and council staff.
The applicant has until July 24.
