The $550 people paid was for the survey fee, if they would eventually be given a lot it would be under lease from the Government with conditions and an option to buy after a few years.
As far as I can find out, the area was already a sub division a few years ago, but there was some controversy over the people that were given lots, so the issuing of land lease was stopped. I do not know why areas under water were surveyed, those areas will be removed from the sub division. that's all I know.