The group says that, based on the state's public trust doctrine, no private development should be allowed on the site, located southwest of Lincoln Memorial Drive and Michigan Street near the lakefront.
County officials want to sell the site to Barrett Visionary Development, which has proposed a 44-story building on the site with a 180-room hotel, 179 apartments and 40,000 square feet of retail space.
The DNR plans to make a decision on the public trust doctrine issue for the property by the end of the week, said DNR spokesman Bill Cosh.
Last year the DNR told county officials that the property was not within the original lakebed and therefore not subject to the public trust doctrine.
However, Preserve Our Parks members, citing maps from the 1800s, say that determination was incorrect. That prompted another review by the DNR.
"They can't say it was not lake bed," said Charlie Kamps, a Preserve Our Parks board member. "The evidence is overwhelming. They can't dispute the facts."
Kamps declined to say if Preserve Our Parks would file a lawsuit if the DNR does not side in its favor on the issue.