Parramatta Council has knocked back a proposal by Oatlands Golf Club to rezone spare land next to its 11th fairway.
The proposal to rezone vacant land next to Niblick Crescent at Oatlands to create three residential lots was unanimously rejected by councillors on March 24.
This followed the submission of a residents' petition of 79 signatures.
Before tabling the petition, Cr John Hugh said residents held fears for "their life and their environment" if the proposal went ahead due to flooding at the site after heavy rains.
"The stormwater is a serious concern, especially after this open space is closed off," Cr Hugh said.
"The water just pours down from the golf course to this street.
"It's very clear the public interest is against this application."
After the meeting, golf club director Robert Lynch told the Sun he was "struggling to believe the proposal was decided on its merits" and that the flooding issue was used as an "excuse" to reject the proposal.
"Leaving the land as it is does nothing to mitigate the flooding," Mr Lynch said.
"We're very disappointed about the result and - to be honest - very disappointed about how it was handled.
"You can understand the residents wanting it to stay as is, but the truth of the matter is we have 690-odd members who live in the council area who have a vote at council elections."
Mr Lynch said the club would decide its next steps after its next board meeting including looking at other available options under the site's present zoning.
"We thought housing was more in keeping with the surrounding area," he said.
"If it was rezoned public open space, we'd be quite happy because then council could buy it from us."
Mr Lynch said the push to rezone and sell surplus land was aimed at improving the club's financial viability after an operating loss of $128,886 in 2012.
"Golf clubs all over Sydney are struggling to break even and recently quite a few have gone into liquidation," he said.
"We would use these funds to avoid that situation."