Four options have been mooted for the replacement of the ageing McGennan toilet block and most would mean moving it closer to Warrnambool's foreshore promenade.
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Some councillors flagged building the new toilet block near the footpath in the centre of McGennan car park could be "a big mistake" and cause the council grief.
The other three options include rebuilding it on the current site on Pertobe Road near the kiosk as well as two sites at either end of McGennan car park.
Another two potential sites on the Lake Pertobe side of the car park were ruled out after a meeting with emergency services.
Plans for a new toilet block have been in the pipeline since 2013 after a council strategy flagged the need for the current facility to be relocated closer to the beach.
The new facility would include better changing facilities and outdoor showers.
Councillors unanimously endorsed a motion to continue with design works for the new facility but no decision was made on a preferred site.
Cr David Owen said the current toilet block had been there a long time and was horrendous.
He said there was a need for the facility to be improved but would hate to see it on the site closest to the middle of the car park labelled as site four.
"That would be a big mistake. I think that will come back and bite us," he said.
Mayor Tony Herbert said he would have great difficulty supporting site four given it was the city's "pristine viewing opportunity that we are hopeful of getting back one day".
He also said site four could be a big mistake.
Cr Peter Sycopoulis said site four could cause a "larger amount of grief" and said the council needed to be mindful of any possible future development of the foreshore area.
Cr Mike Neoh asked whether the almost shovel-ready foreshore master plan would impact on plans to replace the toilets.
In relation to the master plan, Cr Neoh said with a long gap between the surf club and Hopkins River, the council may also need to think about planning where the next toilet block would go.
However, he said there had always been a need for toilets closer to the beach, especially for parents with young children.
Cr Sue Cassidy said most residents and tourists would rejoice replacing the toilets was getting closer.
"It has been a toilet that has been fairly ordinary for quite a long time," she said.
Cr Robert Anderson said the toilet block had reached its used-by date and moving to one of the three alternative locations would be fantastic.
Cr Kylie Gaston said Department of Environment Water Land and Planning approval was key to the project.
"Nothing's going to happen here without DEWLP approval," she said.
However, she said no matter which site was chosen it would be a more sustainable building with showers and all-abilities access.
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