The Cork Motor Club has applied for a special licence to stage the event on a 3.5 kilometre track around the former Kinsale Road landfill site on May 30 in aid of Marymount Hospice.
The RallySprint Competition, which is being supported by the city council and Bishopstown Lions Club, has the potential to attract up to 10,000 spectators.
But a city council meeting was told that residents living near the site have serious concerns about the proposed rally.
Councillors said they are worried the event could set a precedent for the landfill to become a regular rally venue.
They also said there are concerns about the management of traffic and parking on the day, and about noise from the rally cars.
The 150-acre Kinsale Road dump ceased landfilling operations last July after almost half a century. Recycling, composting, timber recovery and electrical equipment recycling continues at the site.
Most of the vast site has been capped and landscaped as part of city council plans to transform it into a Phoenix Park-style public park.
Cllr Ted Tynan, who was the first to raise the issue on Monday, said he is not against the idea of fundraising on the site.
“But I have concerns that this kind of event will destroy the whole idea of the park,” he said.
He was supported by Cllr Sean Martin who said residents have concerns that rallies could become a regular feature on the site. He also criticised the lack of information about the event.
“We mentioned circuses and things like for the site that but there was no mention of a rally,” he said.
Cllr Chris O’Leary said the event organisers should be “up-front with residents about what’s planned”.
But city manager Joe Gavin said it will be a once-off event which should be supported. “I don’t see anything wrong with that,” he said.
Cllr Jonathan O’Brien said the event has huge potential and will boost the local economy. And he said organisers will have to meet criteria around traffic management and noise levels.
Cllr Lorraine Kingston said spectators’ cars will be parked at the nearby Black Ash park and ride with spectators then bussed across the road to the rally.
And Cllr Des Cahill said of the residents: “They have had over 50 years of smell and flies. One day of noise won’t kill them.”