Joe Elias, a friend of Mr Obeid's son Eddie Obeid jnr, is locked in negotiations with the Roads and Maritime Services (RMS) about surrendering a lease on land the government needs for the development.

Court documents show the RMS has been trying to evict Mr Elias' company Blackwattle Bay Marina from the site, terminate the lease and regain control.

A spokeswoman for the RMS told Fairfax Media the agency and Blackwattle Bay Marina "are in the final stages of positive negotiations for the Blackwattle Bay lease arrangements".

"Part of this includes settlement for the relocation of Blackwattle Bay Marina to an alternative location," she said. "Discussions are progressing, which are commercial in confidence."

Mr Elias did not respond to calls.

The development plan, announced by Premier Mike Baird and Planning Minister Rob Stokes, will see the Sydney Fish Market demolished and apartments, commercial and retail developed in its place.

A new Sydney Fish Market will be built on a neighbouring site at Blackwattle Bay. The RMS, which is the land holding agency, is negotiating with leaseholders about vacating the site.

They include concrete company Hanson and Mr Elias, whose party boat business All Occasion Cruises operates on the site.

Mr Elias was controversially awarded a tender to redevelop the site into a marina in 2009 by then Labor ports minister Joe Tripodi.

In August 2009, Mr Tripodi announced that Mr Elias had won the $15 million to $20 million tender for a maritime development on the Blackwattle Bay site.

A two-stage tender process had been recommended, but NSW Maritime's then chief executive Steve Dunn dismissed all other bidders, including major property developer Lend Lease, after the first stage and declared All Occasion Cruises the winner.

The Elias bid was higher than its competitors, but partly because it included a non-conforming function centre.

Since then, and in an unrelated matter, Mr Dunn was found to have acted corruptly by scrapping a policy that would have put the Obeid family's Circular Quay leases out to competitive tender.

Mr Tripodi, who appointed Mr Dunn to his position at NSW Maritime at the behest of Mr Obeid, was also found to be corrupt.

Majid Saab, Eddie Obeid's son-in-law, is also a close friend of Mr Elias and has worked as a barman with Mr Elias' company Wild Boys Afloat, which offers male strippers in G-strings performing for hens' nights.

Mr Elias' development never happened.

On Monday, Mr Baird and Mr Stokes announced an agreement had been reached between the government's development arm, Urban Growth, and leaseholders at the existing Sydney Fish Market to proceed to "design, planning, site investigation and negotiations".

They said the new market, to open opposite Wentworth Park, would include levels "under the water line" and, at 35,000 square metres of floor space, would be more than double the size of the existing site.

The current market will continue to operate while the new one is constructed. This will ensure retailers can continue trading right up until it is opened, removing a major impediment to previous redevelopment plans.

The government says the cost of the development will be "offset" by construction of residential apartments, commercial and retail space on the current site. Mr Stokes said the scale and design of that development had yet to be determined.

It is hoped the development will see the number of existing fish market visitors double to 6 million a year. Construction of the new market is due to begin in late 2018.