The proposal was for the 5500sqm site at the western end of Korcula Court and the southern side of Splash Terrace to be used as a storage facility with office space for staff.
The proposal attracted a strong reaction from locals who were keen not to see the facility next to their homes.
They said the facility would draw crime, noise and traffic while ultimately providing no benefit to the community.
At the City�s May council meeting, councillors supported an officer�s recommendation that the structure plan not be supported for a number of reasons, including a lack of planning and detail about how the facility would fit in with surrounding homes.
Local Alan Johns said the initial proposal had caused significant anxiety in the community.
�It was disturbing to see where it was going to be built,� he said.
�This is a nice, quiet community with kids and it was sad to think people had spent their life savings to buy into this area only for this to happen.�
The lot is in the Woodman Point Waste Water Treatment Plant buffer, meaning it cannot be used for residential development.
A representative for the proponent had asked the council to defer making a decision, saying they had considered a low-impact development and �there was a sense there will not be any use for the land�.
�There was no chance of a residential development, so we looked at other uses,� he said.
The City will now get to work producing a district structure plan to guide how development may take place on the site in the future, although it could take 12 months to produce.