Corangamite Shire mayor Neil Trotter is frustrated the council was forced to shell out money to defend its position on works at a caravan park.
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The council approved a planning permit for two amenities blocks, two cabins and a games room at Lakes and Craters Holiday Park.
But this decision was contested by the Camperdown Botanic Gardens and Arboretum Trust, which took the council to the Victorian Civil and Administrative Tribunal (VCAT).
Committee member Janet O'Hehir said the 150-year-old public garden needed to be protected from further development.
However, VCAT has upheld the council's decision.
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Cr Trotter said the council was pleased with the outcome. "It's frustrating that the case went to VCAT," he said. "We've had to spend a lot of money to prove what our planning officers stated in the first place." Ms O'Hehir said the outcome was disappointing, but said the works could still not go ahead without a solution for sewerage disposal.
"Currently, it is dispersed into the north-eastern section of the public arboretum, which has had to be closed for the purpose," she said.
Ms O'Hehir said the caravan park needed to be relocated.
"The two uses in the one place are essentially incompatible," she said.
"The idea of having traffic and parking all over the critical root zones of 150-year-old trees is a disaster waiting to happen - a disaster for the health of the trees and potentially a disaster for campers."
Ms O'Hehir said the caravan park had outgrown its current location.
Member for Western Victoria Bev McArthur, a former Corangamite Shire councillor, shares this view. She said the co-location of the botanic gardens and caravan park was "the worst of both worlds".
"I want Camperdown to have better amenities: a caravan park nearer to town that has all the modern facilities that visitors can expect and a good botanic garden and arboretum that can be an attraction for locals and visitors," Ms McArthur said.
"If developed properly both facilities can be and should be, major economic and tourism drivers for Camperdown."
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