All seven Liberal councillors declared a conflict of interest and left the meeting when an application for a three-storey block of flats next to Woolooware train station was considered by a Sutherland Shire Council committee.
The application for 16 flats and a cafe - with no onsite parking for residents - was lodged with the NSW Department of Planning, Industry and Environment under an affordable housing policy.
The council's views were sought, but the department will make the decision.
The application was lodged by Pacific Planning, of which Liberal Party identity Matt Daniel is a director. Pacific Planning is managing the application on behalf of the development company.
In June this year, Pacific Planning lodged a site compatibility certificate with the department for 1 Panorama Avenue, Woolooware.
A report by council staff said site compatibility certificates, under the Affordable Rental Housing SEPP (State Environmental Planning Policy), "aim to facilitate redevelopment for flats near key railway stations, without the need for a rezoning, should the proposed development be compatible with surrounding land uses".
"The development proposes a three-storey residential flat building comprising 16 dwellings, of which eight are proposed to be managed by a social housing provider as affordable housing for at least 10 years," the report said.
"The indicative development concept also includes a cafe fronting Swan Street and has no on-site parking."
The report said increased density and affordable housing in this location had merit, but the development concept was of significantly greater scale and density than its local context.
"The lot is constrained being small and shallow," the report said.
"The proposal is likely to have adverse impacts on the character of the predominantly low density residential locality, particularly given no onsite parking is proposed."
The report concluded, "The request for a site compatibility certificate is effectively a rezoning, without any community consultation.
"Site compatibility certificates are typically reserved for very large sites or precincts where significant change is being contemplated.
"It is unusual to facilitate change in the character of an area through an individual development on a small site.
"The subject lot is constrained, being small, shallow and adjacent to a railway line."
When the matter came before the council's Strategic Planning Committee on August 10, six Liberal councillors declared a significant non-pecuniary interest, saying they knew Mr Daniel.
Liberal Marie Simone declared a pecuniary interest because, as well as knowing Mr Daniel, her husband uses the same town planner.
The seven Labor councillors and independent Steve Simpson voted unanimously for the council to oppose the proposal.
The application stated the development site, "10 metres from the station", provided "a unique opportunity to support the supply of affordable housing, adjoining a major piece of transport infrastructure in an area that already accommodates a number of residential flat buildings".
Eight of the units would be designated affordable housing units, managed by Pacific Community Housing, for the stipulated period in the SEPP of 10 years.
"The subject site is under-utilised in its location context next to a train station entrance that connects the site to a number of centres within just a few minutes," the document said.
Labor councillor Michael Forshaw, who moved the motion to oppose the application, said later, "We are always looking to see where affordable housing can be provided, but this proposal is too big, too dense, has no parking and is out of character with the area."