Announcing the decision on Thursday, parliamentary secretary for the Environment, Simon Birmingham, said the plan for the aged-care facility was a "rejuvenation" of the site known as 10 terminal, a cluster of former army buildings with a commanding position and spectacular views. "Rejuvenation": Senator Simon Birmingham, parliamentary secretary to the Minister for the Environment. Credit:Jay Cronan He said $3.5 million would also be invested in re-landscaping the area around the site, to create new lookouts and walking sites. And he argued that the approval for the aged-care facility was "the best adaptive reuse solution for the site ... to address a shortage of aged-care facilities on Sydney's lower north shore". The proposal has been strongly opposed by Mosman Council and the National Trust as well as by local critics, who have banded together as the Headland Preservation Group.

Graham Quint, National Trust Advocacy Director, said the federal government's approval of the plan amounted to tacit acceptance of an argument that the Middle Head defence buildings had no heritage significance. "That sets a really bad precedent," he said. "If you go down that line you'll just end up with oral histories of everything and no fabric kept." Mayor of Mosman Council Peter Abelson condemned the decision as inconsistent with the aims of Sydney Harbour Federation Trust and contrary to public opinion canvassed during the consultation process. "The majority of the public who have communicated with us very clearly think there are better use of the land that are more environmentally friendly, sociable and less exclusive," he said.

"Eighty-nine beds on this site is a very dense development, it's a very exclusive development, and its out of keeping with the military heritage and environmental quality of the area." The facility's operator, Middle Head Health Care, said through director Teelia Peploe that conversion of the 10 Terminal buildings would mean "a significant addition to the fabric of community life in the Middle Head vicinity, and the lower north shore generally." But Headland Preservation Group president Linda Bergin said it was a " terrible decision", which her group believed was "illegal". "We will be assessing our legal options and exploring ways to stop the development taking place" she said. She said she believed that "most in the community would be horrified that the site is being sold off to a developer".

The trust and Senator Birmingham say the site will be leased for only 25 years, with no renewal, but opponents say it will be impossible to dislodge elderly residents as the lease term draws to an end. A former long-standing member of the Sydney Harbour Federation Trust Board, Brigadier Kevin O'Brien, says he is horrified that the current board seemed prepared to accept the proposal. "They [the plan's advocates] will tell you that they are going to do a ... [25-year lease] but anybody with a business brain would tell you that this is predicated on something much longer," he said. "You will never get the people out. The business itself will never leave. I think we are effectively selling off prime Sydney real estate to an entrepreneur; that's what we are doing."