The Waitaki District Council Reserves and Other Land Empowering Bill has passed its second reading.
Although there was strong opposition from the Green Party and New Zealand First members of Parliament, the vote in Parliament on Wednesday night was 97 to 23.
Waitaki Ratepayers and Concerned Citizens group chairman Warren Crawford said he was disappointed with the outcome of the vote.
"There is a lot of history associated with this area," he said. "It should be a reserve land for everyone to enjoy and the vote has chosen to ignore the heritage elements which are associated with it, including Maori ovens and moa bones which were found on the site.
"Two quarantine stations, one for humans and one for animals, were also located in this area and these heritage links have also been dismissed."
Te Runanganui O Waitaha Inc Tumuaki president Stephen Bray said he watched the debate in the House on the passing of the Forrester Heights/Lookout Point Bill and was saddened by the speeches from National and Labour members.
"This was a legal law issue and it denies the more relevant issues of the historical land use and the Oamaru founding fathers," he said.
"The two minor parties, The Green Party and New Zealand First, are to be congratulated for understanding this historic use.
"Te Runanganui O Waitaha me Maata Waka Inc will copy the transcript of the debate once it is published in Hansard and will forward it to the Waitaki District Council and trust they will undertake the proper consultation with the people of Oamaru."
The bill was promoted by Waitaki MP Jacqui Dean, who spoke to the second reading.
Mrs Dean said the select committee concluded that Lookout Point was not a reserve and confirmed it as being vested as an endowment in the council in aid of borough funds.
"In its select committee report, the committee noted that Land Information New Zealand and the Department of Conservation, which both have an interest in this, had reviewed their records and they were satisfied that treating Lookout Point as a reserve was "a genuine mistake, resulting from the various meanings and legal uses of the word 'reserve," she said.
"It has been the most terrible tangle and it has certainly tied up the local community for a number of years."
Mrs Dean said any proposed use of the land was a matter for the Waitaki District Council and out of the scope of the bill.