Dubbo Regional Council has given the committee the same amount of money it paid for former Crown land in east Dubbo.

The council gained approval from NSW Minister for Lands Niall Blair to sell the 3.5 hectares of land bounded by Cobbora Road, Tony McGrane Way and Yarrandale Road for $262,000.

But it was required to invest the money in another Crown land property under its care.

Director community services David Dwyer confirmed on Friday that the council had opted to inject the $262,000 into an irrigation upgrade at Victoria Park.

He said the $262,000 donation to Macquarie Home Stay came from money that had previously been set aside for the irrigation work.

The movement of money was approved at a council meeting in April, just before Dubbo City Council and Wellington Council were amalgamated.

“Council didn’t have to do it but it saw it as a good will gesture,” Mr Dwyer said.

Mr Dwyer said the council also did not consider it right to “profit from selling someone else’s land”. Crown land in NSW is owned by the state government.

On Thursday chairman of the Macquarie Home Stay committee Rod Crowfoot officially announced the land acquisition in front of a crowd of supporters and committee members.

Talks on providing Western NSW residents with affordable accommodation before and after treatment at Dubbo Hospital began in 2009.

Subsequent fundraising and $3.3 million from the state government’s Restart NSW Cobbora Transition Fund has helped it move forward,

Since the land changed hands a development application has been lodged with the council.

Macquarie Home Stay will be built in stages with the first expected to cost about $3.5 million.

Construction of stage one, including 14 patient rooms, is expected to begin before mid-2017.