Formal planning in Arniston started in 1905, when the town was established as a holiday town. Before 1905 there were already a few holiday homes, as well as about thirty fishermen families who lived in the area since 1870. In 1905 the landowners and the fishing community reached a settlement: five families, living in the area since the early 1850's each received a plot of land in the new town, while the ten morgen of land that is today Kassiesbaai was sold to the rest of the fishing community for one shilling. Arniston expanded in 1934 and again in 1970, when new plots were added to the town. The original Arniston Hotel was built in 1934.
Arniston became part of the Cape Agulhas Municipality in 1989.
The Municipality sought to develop Arniston, from the perspective that the Municipality should endeavour to continuously set out as many new plots as possible, to increase revenue from the sale of land and also from rates. Conservationsists resisted the proposed development. The Municipality's planning was inadequate and the conservationists succeeded in various actions against the plans of the Municipality. In December 2009 the Cape Agulhas Municipality eventually approved a spatial development plan for the region. Detailed planning for Arniston is still required.
A second difference between the Municipality at the time and conservationists concerned the nature of proposed future development. The Municipality proposed to convert more land in plots for holiday houses. Conservationists proposed that the town and the local community will be better served if densification is promoted, with adequate guidelines. For a town of holiday houses local authorities need to provide expensive infrastructure and services based on the need at peak times, yet for long periods this capacity will simply be wasted. Holiday homes also do not provide adequate income for the permanent residents. Densification, including a focused plan to promote more guest houses and other facilities for tourists, would be more suited to the ecology of Arniston in the long term and would also provide a more sustainable income for the community. A scarcity of local drinking water and a limited carrying capacity of beaches constrain development in Arniston. The town was established on dunes and settlement interfered with interaction of wind, sea and sand, so that the beaches of Arniston have been eroding steadily over the last century.
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