"It is expected that early in 2017 a report on the matter will be placed on the (Te Hiku) Community Board agenda for their consideration and a recommendation to council," property legalisation officer Kaye Lethbridge added.
"It is likely that the recommendation will be to publicly notify the lease proposal and call for submissions.
"There would be a one-month time frame for submissions. These would then need to be considered by an appointed committee, which may be the community board, and a recommendation made to council. Council would make the final decision."
Mr McMahon described the 'not yet' response as untenable, given that the council had been advised of "these matters" some nine months ago.
"That seems an inordinate amount of time to request that someone complies with local government bylaws," he said.
"Do I take it then that camping on Perehipe reserve is available to all and permitted, along with the siting of a building? Am I able to charge the public to camp on other FNDC reserves?"
Te Hiku Community Board member (and until last month chairman) Lawrie Atkinson continued to disavow any knowledge, although he had been party to the community board's recommendation to the council to sell the reserve in 2011.
"The fact is that there has not been a formal agreement of any description with the FNDC for the use of this reserve since 2006," he said.
"There was, we are told by Mr Atkinson and Mike Colebrooke, of FNDC, a 'gentleman's agreement' that the holiday park owner would mow the grass and supply water to the toilets on the reserve, but no one has specified who the 'gentlemen' who sanctioned the use were, and as a result the generation of tens of thousands of dollars of revenue for a grass-cut and some water."
Mr McMahon said the reserve had been marked out with around 30 camp sites, not including powered sites, and at $25 per person per night, and an average of four people per site, it was not difficult to quantify the value of its use).
"It's also worth noting that the illegal building and development of concrete pads has gone on without a whimper of disapproval from the FNDC," he added.
"Why is this stuff OK for a select few? The reserve needs to be used for the benefit of the wider community, and not for the financial gain of individuals, as has been the case with the approval of our elected representatives and FNDC staff.
"There is no doubt that council staff have known about this, but everyone is ducking for cover. No one is doing anything to address it."
Mayor John Carter said yesterday that he had now been made aware of the issue, and had demanded a report from staff by tomorrow.