In February, 2013 the council received a proposal to demolish the Crown-owned Challoner House in order to make way for a two-lot subdivision of 4,004m2 and 3648m2.

However, a majority of councillors voted to "refuse" the application, save the building and try to get it Heritage listed.

The council has since discovered that The Environmental Planning and Assessment Act (section 89), does not allow the council to refuse or impose conditions for a Crown application without the approval of the relevant Minister. 

The council has not forwarded its intentions to the Minister and has been advised by the JRPP that it will be dealt with at a hearing on Monday, June 24 in Mittagong. 

The decision to save the building was split five-four with Crs Gair, McLaughlin, Turland and Scandrett wanting it to be demolished.

Challoner House was part of the Renwick Boys' Home in Mittagong, built in 1941.

Cr Larry Whipper said the building was "quite significant" and could be used by the community once restored.

"Our heritage advisor saw the value in that item," he said. "Not only does it have quite considerable heritage status in terms of the context of Renwick, but it also provides an opportunity for the community to have a facility that's unencumbered by a trust."

Cr Duncan Gair said the building was "derelict-looking" and "awful".

"If we want to ruin a good sub-division then keep this property," he said. "We could nearly say this is Mittagong Bowling Club revisited in a different spot."

The council reaffirmed its intention to demolish the old Mittagong Bowling Club building last year.