Last May, the outgoing council threatened to build a fence and gave business owners on Margaret Pl and Glenda Dr 12 months to vacate the reserve - between the industrial zone, the Lower Shotover delta and State Highway 6.
The new council has backed away from that demand but the issue dominated the agenda of Tuesday's community services committee meeting.
The committee, chaired by Cr Cath Gilmour, resolved on legal advice to publicly notify its plan to revoke the section's local purpose (beautification) reserve status and subdivide it into a freehold lot.
A hearing for any submissions will be chaired by two independent commissioners appointed by council chief executive Debra Lawson.
If the reserve status is revoked, the council will lease the lot with a requirement that tenants will vacate if the land is required for public use. Conditions of the lease will include planting, watering and maintenance.
Tenants would pay commercial market rates and a deposit to cover the cost of subdivision and consent fees, which could run to thousands of dollars.
In his report, council community services general manager Paul Wilson said the resolution had the potential "to be opposed", and to a lesser extent could be "tested legally".
"The nature of compromise means not everyone's going to be happy. I think it's got enough give and take on both sides to work," Cr Gilmour said, adding that "if it works we get a win-win for the community".
Although in favour of the lease option, Cr Simon Stammers-Smith abstained from voting on the motion.
