Clutha Recreation Centre Incorporated has been working for four years on the proposed facility, which would include netball courts, a gymnasium and social rooms.
The council, which met to debate submissions to its draft annual plan, unanimously agreed to contribute up to $85,000 to be spent finalising planning and design of the proposed centre.
Because of this sizeable contribution, it also decided two council representatives should join the incorporated society as it developed the project.
The council agreed it was important the venture be recognised as a district-wide development.
It recommended the money be paid through a small addition of less than $1 to the uniform annual general charge.
Other recommendations. -Fluoridation: Some councillors pushed for Public Health South to conduct an independent review on whether fluoride should be added to the water supplies in Kaitangata, Milton and Tapanui.
Cr Bruce McCorkindale said even more community consultation might be needed on the contentious issue.
But Cr Ted Gallagher said Balclutha had had fluoride in its water for many years and there had been no issues there.
No rates have been set aside for the work as the council hopes to get government funding.
It was recommended the council further consider adding fluoride to the water for those communities but only after more consultation once it knows if it has secured Ministry of Health funding for the work.
South Otago Historical Society: Extra money to continue paying for full-time curator Gary Ross was supported but only for the next year.
The society wanted another $8000 to provide job security for Mr Ross and to retain what it said was a valuable service for the wider community.
But Cr Murray McLean said the society was "stuck in its own time zone" and was not doing enough to create its own income.
"To me, there is a lot more room for them to help themselves."
Cr Bruce Vollweiler was concerned there might be an obligation to continue funding the position if Mr Ross left.
Cr Peter McPherson also questioned whether a town of 4000 people could justify having a full-time curator.
The council agreed to pay the extra money for the coming financial year but said some conditions were needed before any future funding was guaranteed.
Healthy homes: An extra $5000 will be added to the council's contribution towards a scheme that insulates damp and cold homes in the district.
The council allocated $15,000 towards the Otago Clean Heat Clean Air programme which delivers subsidised insulation to low-income families, as well as offering advice on how households can cut their energy costs by improving energy efficiency.
The council's recommendations will be debated again and confirmed at a meeting on June 19 when it adopts the annual plan and strikes the rates.
