The project, which could cost up to $145,000, was adopted by the Waitaki District Council's committee of the whole on Tuesday and an application will be made through the Otago Regional Council for funding from the Ministry of the Environment.
The area, between the Oamaru Creek and pedestrian railway bridge covers about 3600sq m and was the site of the former Placemakers timber treatment plant.
Fears over contamination were raised in the 1980s and some remedial work was done in the 1990s, including a containment cell with a concrete capping to hold some of the contaminated material.
However, recent detailed investigation, soil sampling and analysis found areas of arsenic soil contamination above acceptable limits (80mg per kg of soil).
Various options were looked at, including removing contaminated soil and replacing it, ranging in cost from $145,000 to $445,000. The $145,000 solution was recommended, but the cost could be reduced to $80,000 or less if sand from Oamaru Harbour was used.
That option was to seal the area with a clay capping and sand from the harbour at a depth of 400mm. Soil would be spread and the area grassed.
The council's corporate services manager, Carolyn Carter, said that option also reduced the potential risk of arsenic inhalation and ingestion if the contaminated material was excavated, removed and disposed of at the Oamaru landfill.
A management plan for the site would be produced, which would include future monitoring.
The committee also decided to use money from the council's $160,900 hazardous sites mitigation fund to make up any shortfall in a grant from the ministry fund.
