Councillors have voted to seek a $2.5 million loan from the state government to help fund Warrnambool's new library and community hub.
The $20.3 million project - a joint project with South West TAFE - has been declared "shovel ready".
Cr Robert Anderson said the council would be "silly" not to apply for funding under the state government's new Community Infrastructure Loans Scheme.
His comment drew a response from an audience member who said "if you can't afford it, don't build it".
Under the scheme, construction of the library on the Tafe site is expected to begin within 18 months and be completed within three years.
Cr Kylie Gaston said that with the state government subsidising 50 per cent of the interest, it would save the council a substantial amount of money.
Borrowing money at 1.42 per cent through the scheme is expected to save the council $280,000 over the 10 years of the loan.
"We're pleased that we're in a shovel-ready position to be able to take advantage of this loan opportunity," Cr Gaston said.
Cr David Owen said the announcement of the $100m loan scheme was great timing and the low interest rates made it extremely attractive for the council.
Cr Sue Cassidy said taking out a loan with such a low interest rate "made sense".
She said it meant the money the council had set aside for the library could now be spent on other infrastructure projects "or save the residents the heartache of another rate rise next year".
In response to a public question, chief executive officer Peter Schneider said that rather than fund its contribution to the library project from cash, the council would instead make use of an "advantageous" loan.
A further $500,000 that has been set aside in the council's budget for the project would be used as matched funding if it was successful getting a Building Better Libraries grant.
The state government has chipped in $16.3 million to the project while TAFE will contribute $830,000 and the council about $3.12 million.
The motion to apply for the loan was passed unanimously by councillors.
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