The Waitaki District Council Reserves and Empowering Bill, which changes the status of Lookout Point (Forrester Heights) and two other sections, one in Oamaru the other in Palmerston, is expected to be rubber stamped within days.
The bill, which was supported by Waitaki MP Jacqui Dean, was read in committee at Wednesday's sitting of Parliament.
It will now pass to the third reading.
Efforts by Green MP Eugenie Sage to alter Clause 7 of the bill, which would have changed the definition of the land to "reserve" from "endowment", was lost.
Ms Sage said changing the clause would see the land remaining as reserve land, administered by council, but open to all, rather than being sub-divided.
"The Green Party has been convinced by the submissions that were put forward by residents of Oamaru and the evidence they brought, particularly people like Barry Monk and Helen Stead, that the initial decision to vest the land as a reserve was not made in error," she said.
Waitaki Ratepayers and Concerned Citizens group chairman Warren Crawford said he was "reasonably happy" with the outcome.
"We have got to live with it," he said. "However, we will still endeavour to circumvent the outcome at local council level, particularly as the mayor promised public consultation before any final decisions were made."
Speaking to the bill in Parliament on Wednesday, Nick Smith, MP for Nelson, said he considered the best use of the land was for it to be a subdivision and for the council to be able to enjoy the $3 million that it will receive for the sale of this land to offset the debt and the rates of its communities.
"Time is money and when you see a piece of land that is worth $3 million every week of delivery, every week of delay, is a cost to that local authority of $3000 every week."
Mrs Dean commented that the current council wished to have the designation corrected so that it can decide what to do with the land.
"Whatever it does is up to it and so it should be," she said.
Twenty-one submissions for the bill were received by the committee, including one from the Waitaki District Council.
For Forrester Heights, also known as Lookout Point, the bill will correct a historical error in relation to the word "reserve".
The land was bought by the government from Ngai Tahu in 1848 as part of a Kemp purchase and was included in the original subdivision of the town of Oamaru.
In 1885 the land was "reserved" as an endowment in aid of funds for the benefit of the [then] Oamaru Borough Council in accordance with Section 38 of the Land Act 1877 Amendment Act 1884.
An administrative oversight in 1937 mistakenly vested the land as a reserve. Reserve status and endowment status are separate concepts and that may not have been fully appreciated in 1937.
Forrester Heights has been steeped in controversy since it was first proposed in 2006.
The 5842ha block has been designated 29 sections, with prices from about $300,000, but further marketing and development was halted in 2007 when the council discovered the anomaly on the titles to the land.