A 20-year-old DA is being revived to build a 120-room hotel on bushland near the old Katoomba golf course.
The "for sale" sign went up last week on the site, at 142-150 Narrow Neck Road.
Potential opponents have already expressed their concerns, with someone spray painting in large black letters: "Was anyone consulted?"
The answer is yes, but the consultation was done back in the late 1990s.
Council approved the plans in October 1999. Since then, sufficient work has been carried out on site to keep the DA alive.
A council spokeswoman said: "Land use advice provided by council in 2018 indicates that an operational consent was appropriately secured and physical commencement occurred prior to the specified time. This means that the development consent is valid in perpetuity."
But Ward 1 councillors said the process was not fair.
Cr Kevin Schreiber said it was "a perfect example of land banking and this has to be outlawed by the government as soon as possible".
Similar concerns were raised earlier this year with the revival of a 1989 DA for a reptile park on the highway at Wentworth Falls.
"It's definitely not right," Cr Schreiber said. "It's unfair to everybody that this person can start a development 20 years later. And people would have bought there without any idea about it. How many more have we got like this in the pipeline?"
He said the case should be referred to the state planning minister, Rob Stokes.
"The minister should be contacted by council immediately and it should be dropped into minister Stokes' lap."
Cr Kerry Brown said: "This is another 'zombie' development from the past approved under a local environment plan that is no longer current.
"There is an urgent need for legislation that puts a time limit not only on commencement but on completion of developments after which a new application must be made to council."
Ray White Commercial is seeking expressions of interest to buy the 16,840 square metre block. It is advertised as a DA-approved hotel on land zoned medium density residential.
The deal also offers an alternate 40-townhouse development, subject to council approval..
The property is being offered for sale by expressions of interest which close on August 14. According to real estate websites, the land last sold in June, 2004, for $1.4 million.