Allt Duisdale, a local reservoir owned by Scottish Water, was recently due to be sold at auction in Glasgow.
However, after interest was expressed by CCI and Sleat Community Trust in putting in a bid for the reservoir, it was withdrawn from the auction by Scottish Water.
Land Reform laws give local groups two months to officially register their interest in the site which extends to 3 acres.
Susan Walker, secretary of Camuscross Community Initiative said that she welcomed Scottish Water's decision. She revealed that one possibility to be examined would be the production of hydro-electricity. This could be sold to the National Grid and generate, quite literally, an income for the community.
If the project is to proceed local groups must have the backing of the majority of local residents and raise the required cash to buy the land.