The lease will be offered to the Anderson's Bay Community Kindergarten, though its head teacher said yesterday the issue still had to be discussed at a committee meeting.
It then had to be discussed with parents before being confirmed.
The decision at a council meeting this week follows almost five years of discussion on the future of the school, which was closed by the Ministry of Education in 2010.
Ngai Tahu bought the land, then sold it to the council in 2012 for $300,000.
In June, expressions of interest were sought for the 1.6ha block of land.
Applications included proposals to use the site as a motorhome caravan park, a Montessori school, football fields, a transitional home for homeless youth and a freedom camping site.
Council staff recommended the kindergarten option, which would re-use the school buildings.
Councillors voted for the recommendation, except Cr Marie Laufiso, who raised concerns the long-term future of the kindergarten was not certain as there were no projections about whether there would be sufficient numbers to use it.
A report on the matter said the kindergarten operated from the Andersons Bay Presbyterian Church, in Silverton St.
In 2014 the church received ''unfavourable earthquake building reports'', and the kindergarten had been looking since then for a new home.
Head teacher Lyn Morton said yesterday the kindergarten's committee had not discussed the issue.
A meeting had to be held, and families consulted before she could comment further.
Council recreation and facilities manager Jendi Paterson said the kindergarten was yet to sign a lease.
The kindergarten lease was the preferred option, and ''it's the option we will be looking to progress with the school in the new year''.
The kindergarten would pay for other improvements to the school block, at an estimated $150,000.
