The authority has told the owner of the site it would consider plans for buildings no higher than three storeys with attics, while any other commercial uses would need to complement the residential character of the suburb.

Tania Parkes, a consultant for the project, which is being developed by the Shepherd Foundation and Oakstand, on Tuesday said the proponents would continue to meet with the National Capital Authority to prepare a proposal to amend planning controls ahead of fresh construction on the site.

"The Shepherd Foundation and Oakstand will continue to work with the NCA and look forward to a positive outcome," Ms Parkes said.

The National Capital Authority board considered feedback from community consultation at its meeting on October 19 last year.

"The authority agreed to advise the proponent that the authority would only consider a proposal for a development of more defined use and lesser scale than that proposed, in line with nearby developments," a public record of the meeting said.

A masterplan prepared for the site included constructing new single-level residential apartments with ageing-in-place options and aged care accommodation, along with a hotel in reused heritage buildings.

Building heights would be limited to levels within the tree canopy, while the total site would remain 60 per cent open space, the plan said.

The national capital plan would need to be amended to allow residential development on the site, which is located on Commonwealth-controlled land. The site is currently zoned for community facility use.

The 11-hectare site which housed the Australian Forestry School between 1927 and 1964 was sold to Gunyar Pty Ltd in June 2002. The CSIRO retained a 20-year lease for use and management of the site.

The crown lease for the site is held by a trust for the Sydney-based Shepherd Centre, a registered charity which supports early intervention for deaf and hearing-impaired children.

Developer Oakstand Property Group was appointed by the charity to manage the site's development under the banner Forestry Place.

An earlier heritage impact assessment completed by consultants ERM found development of the site would have a significant cumulative impact to the site's overall Commonwealth heritage values, but this impact could be mitigated.

"The proposed action also presents a unique opportunity for increased access and enhanced interpretation that can broaden the understanding of the values of the place and provide further context as to its national importance as the site of a former forestry school and research facility," the assessment said.

While the presence of the critically endangered golden sun moth was identified, a report prepared by Capital Ecology found "given the small area and degraded condition of the confirmed habitat, the small size of the [moth] population, and the low potential population viability, we expect that the impact would not be considered significant".

The Australian Forestry School opened at Yarralumla, then called Westridge, in 1927. It closed in 1964 ahead of the department of forestry opening at the Australian National University. The Commonwealth Scientific and Industrial Research Organisation occupied the whole site from 1975.

The original school's accompanying principal's residence, Westridge House, was also used by the CSIRO as a research facility until 2009. It was converted back to residential use and sold, most recently in 2018 to Jaehee Choi for $6.05 million.

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