Council revealed the recommendation in the business papers for the December 17 council meeting while residents who currently hold annual licences were informed on Tuesday night.

The report states that the recommendation will be put to council to "maximise functionality, revenue generation, integrate with the broader reserve, achieve current legislative compliance and meet market and industry trends".

Macleay resident and annual licence holder of a permanent site at Hat Head Andrew Mealing claims approving the recommendation would have a devastating impact on the local community.

"Hat Head's population is 326 people with two corner stores, a surf club, bowling club and a holiday park store and office. There are 47 families that have permanent sites here, we contribute money and time to the Hat Head community. We are members of the bowling club, surf club, fishing club and community group," Andrew said.

"Hat Head can't rely on tourism to survive. If 47 families who hold annual licences and permanent sites are removed from Hat Head, that's a big impact to a little village."

Andrew and his family have had their site at Hat Head Holiday Park for seven years. He volunteers as a patrol captain with the local Surf Life Saving Club and his sons are also involved.

Andrew is also a director of the Hat Head Bowling Club and a member of the local fishing club.

"There are several families who hold permanent sites here who volunteer with Surf Life Saving and look after tourists in the peak season. And in the off season, if there is an emergency we go straight to the surf club and get the equipment out," he said.

Wayne and Robyn Hudson are from Kempsey and have been holidaying in Hat Head for 37 years, they have signed an annual lease for their permanent site for the last 20 years.

"We have done $30,000 worth of renovations to our van over the years. It's just money gone for us," Robyn said.

Margaret Meier is the chairperson of the Hat Head Bowling Club and is involved in the Hat Head Community Group, she has been holidaying in the village since she was a child. She has had her permanent site for eight years.

"Many people who have permanent sites were planning on passing the site and van onto our kids and families," she said.

"This will have a devastating impact on the community. Most of the people who have permanent sites are involved in community groups in Hat Head and without that the village is going to die."

Kempsey Shire Council state in the report: Current holders of annual and permanent licences are impacted stakeholders of this review and it is important for council to clearly outline a strategy to assist current licence holders to make informed decisions regarding the longevity, sustainability and value of their infrastructure. Annual and permanent licences are an important consideration when considering proposed site layout changes that aim to achieve the maximum economic return for the MVCHP.

Holding an annual licence requires the occupier to sign a lease each year for their site at MVCHP.

"We sign a new lease each year and are able to occupy the site for 150 days each year, we can go over that number and we just pay more if we do. We can also nominate other people to stay in our van throughout the year, so the sites are occupied for more than the 150 days," Andrew said.

Council's reasoning for this report and recommendation that will be put to councillors on Tuesday states that this will allow more people to use the sites: MVCHP are on 'community' land and therefore in principle, the issuing of exclusive rights over these sites is not compatible with providing equity of access, especially in high occupancy parks.

The recommended strategies in the report in relation to management of annual licences states that annual licences are returned to short term tourist sites where it is identified that their placement may restrict future layout changes or facility improvements. For Crescent Head Holiday Park, annual licences would not be renewed post their effective license expiry date on June 30 2021 and return to short term tourist sites.

For Hat Head Holiday Park, the number of annual licence sites would be reduced to 32, with licence holders given at least 12 months notice that their licence will not be renewed. Council would undertake staged reduction for remaining sites over time and place a moratorium on licensee's seeking approval for individual site improvements.

For Stuarts Point and Grassy Head Holiday Parks, an immediate moratorium would be placed on licencee's seeking approval for site improvements and council would review the economic impact in three to five years time.

"We don't claim to own the park, we are privileged to have these sites. Everyone who has permanent sites here knows each other and to lose that is going to be devastating," Andrew said.

The recommendation will be discussed and put to councillors at the final council meeting for 2019 on Tuesday, December 17.

Kempsey Shire Council was approached for further comment, but are unable to provide one prior to the council meeting on Tuesday.

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