THE Independent Commission Against Corruption has supported developer Duncan Hardie's claims that Cessnock City Council lacked "competence" in its handling of a hotel proposal at Pokolbin, but rejected allegations of corrupt conduct.

There was "insufficient information to indicate that council's failings are due to corrupt conduct", ICAC commissioner Jerrold Cripps, QC, found after a complaint from Mr Hardie about the council's handling of his 200-room Hunter Valley Accommodation Centre proposal near the council-owned Cessnock airport.

But Mr Cripps referred the matter to the Local Government Department after finding the "council's lack of competence in dealing with these developments may be of interest" to the department.

An ICAC assessment panel found "there appear to be a number of issues raised in council's involvement in the development of the Hunter Valley Accommodation Centre", compared with its handling of developments at its airport.

"These issues, which include obstruction and delays, application of different guidelines for adjacent buildings, allowing the building of a fuel dump to impact negatively on the development, use of different guidelines for gauging visual impact of developments, and the allowance of the illegal construction of buildings on adjoining land, are allegations that council has acted in a less than competent manner," Mr Cripps found.

In a letter of complaint to Cessnock MP Kerry Hickey, Mr Hardie wrote that "as of October 2009 the proposed redevelopment is no further advanced than when we commenced in 2003".

"Of overriding concern has been the inability of council to distinguish between its role as a landowner and as a consent authority," Mr Hardie wrote.

Council general manager Bernie Mortomore responded to the allegations in a long report to the Local Government Department detailing numerous meetings with Mr Hardie over issues relating to the three-hectare hotel site behind the Wine Country Tourist Information Centre.

The public release of the long council response this week coincided with the first anniversary of a critical Local Government Department report into the council following a section 430 investigation.

The report last year found the council was "dysfunctional", at risk of corruption, lacking in leadership and with evidence of an "inappropriate culture" involving gifts and benefits.

The council was given 12 months to address more than 20 recommendations.