City of Newcastle has approved plans for a $3 million renovation of the landmark Beach Hotel at Merewether after the owner took the council to court.
The agreement will formalise the pub's approval to open its ground floor to 3am every night except Sunday.
Owner Andrew Lazarus bought the hotel in 2019 and launched plans for a new upstairs terrace overlooking the beach and live music venue.
He signalled he would like the pub to stay open until 3am, a move opposed by many nearby residents and some councillors. The hotel's liquor licence allows it to trade until 3am, but it has traditionally shut at midnight.
The council rejected the plans in June and Mr Lazarus appealed to the Land and Environment Court.
A council spokesperson said on Monday that the parties had agreed to a "significantly improved" proposal which included fresh architectural plans, reduced trading hours, a detailed plan of management and a revised acoustic impact statement.
The spokesperson said independent legal advice had confirmed the council did not have the power to amend the 3am liquor licence.
The agreement includes no live music after midnight or at any time on the hotel's terraces. Recorded music will not be permitted anywhere in the hotel after 2am.
The venue's lower ground and first floors will close at 10pm on Sundays and midnight every other day. Its Ridge Street terrace will shut at 10pm every day.
The council said "acoustic mitigation" would include hourly noise monitoring after 9pm on Fridays, Saturdays, Sundays, public holidays and any day when live music events were held.
The Beaches must also provide a regular courtesy bus and security guards and form a community working group with police and community representatives.
Co-owner Peter Lazarus, Mr Lazarus' son, said he was pleased to have reached an agreement with the council.
"Our proposal has always been centred around the activation of the first-floor restaurant to make use of the best views in Newcastle," he said.
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