Lake Macquarie City Council is hoping for part of the former Pasminco site at Boolaroo to be rezoned.
The council will send a proposal to the Department of Planning for the 7380 square metre site to be rezoned for light industry and commercial development.
During a meeting this week, a report was read, saying the site has been restored to a level that was safe for residential development.
Despite the report, the council still labelled the area as "potentially contaminated" because of its past use.
The Pasminco Smelter operated for over a century until 2003, with metals like zinc and lead contaminating nearby soil.
However, Jim Sullivan from Boolaroo Action Group is urging the council to remove the label because it is 'outdated' and 'incorrect.'
Jim Sullivan said "The words that the council used - "potentially contaminated" - are very misleading."
"It's common sense that something can't have a potential to be contaminated if they're recommending it for rezoning," he concluded.
