A lakeside reserve at Peppin Point may be sold by Mansfield Shire Council, with proceeds flagged to fund a community hub for the small Lake Eildon settlement — though any contribution will depend on the outcome of the sale process.

The 2.58 hectare Rural Living zoned block on Homepoint Drive — which has lake frontage — was assessed by council officers as surplus to requirements, along with other unused parcels of land across the shire.

The decision was not without sentiment.

Cr James Tehan told council the Peppin Point community had been using an ex-Bonnie Doon CFA fire truck on the land and had hoped to develop the site into a community hub — particularly valuable in times of bushfire danger.

"It's a great little community at Peppin Point," Cr Tehan said, congratulating residents on what they contribute to the area.

Shire CEO Kirsten Alexander acknowledged the community hub idea had come up in conversations but said officers had deemed the land surplus.

Council voted to begin the disposal process, which includes community engagement, an independent market valuation, and expressions of interest from adjoining landowners.

Any financial contribution to the Peppin Point Community Hub project will be determined once the sale process is complete.