A new art gallery at Cannon Hill would cost $40m to build

The alternate option of rebuilding a whole new facility complete with an architectural "wow" factor on the current site would be $1 million more.

Extending the existing building was ruled out because it could not hold up a second storey, and meant spilling out onto too much of the neighbouring car park.

The price tag for a new art gallery would make it one of the most expensive council projects on its books - twice as much as the new $20 million learning and library hub at the TAFE site which is currently under construction.

But the cost is not unusual for a regional art gallery with Shepparton's new facility costing $49 million.

And most of the funding is expected to come from governments and philanthropic trusts.

The feasibility study for the project prices a whole new build at the Civic Green at $41.2 million while construction at Cannon Hill would be $40.2 million.

The sale of the current site could bring in $5 million, or $348,000 in rent if the council decided to keep it.

The feasibility study, along with public consultation, found most people were "overwhelmingly in favour" of the new location at Cannon Hill, and it also had the most backing from potential donors and philanthropic funds.

A business case will now be done and is expected to be completed by September.

Outgoing art gallery director Vanessa Gerrans said a new gallery had the potential to act as a central gateway for visitors to world-class local landscapes such as Moyjil at the Hopkins River mouth and Budj Bim near Portland.

A new gallery aims to provide a home for Maar Nation art and cultural heritage, present more Aboriginal art and support more local Aboriginal artists.

She said the business case would provide advice about the "substance and form" of a new gallery and its intended and potential impact in the region.

"The feedback we received through extensive community consultation was overwhelmingly positive," Ms Gerrans said.

"Warrnambool and south-west Victoria deserve a cultural destination that does justice to the growing community who engage with the gallery along with thousands of visitors to the gallery each year and that creates a sense of place and purpose to benefit youth, education, environment and local economies."

Sited near the Portuguese monument on Cannon Hill, Ms Gerrans said she had spoken to the Portuguese ambassador about incorporating it into the new project.

Having outgrown its current building, a whole new facility would mean the gallery could host major "blockbuster" exhibitions such those held in other regional centres, like the Elvis exhibition currently on show in Bendigo.

The vision for keeping it in the CBD includes a "crystal box" that would draw in tourists like the McLaren Vale cube in South Australia and would counter the site's current "limited wow factor".

The architectural feature would also serve as a solar power providing object during the day and by night glow from within using a light installation commissioned by an artist, the report says.

It could also serve as a function space or wine bar.

The site would also have a large LED screen on the front as "a contemporary idea of a lighthouse" and allow digital artworks and messaging.

A rebuild on the site would cover 2980-square-metres on the ground floor and 480-square-metres on the top floor, and an outdoor space for Aboriginal smoking ceremonies.

Expanding the current building was labelled a "very poor option" in the report which said it was more logical to demolish it and rebuild.

A rebuild on the current site would leave the city without a gallery for 18 months and cut off access to the Civic Green for much of that time.

An expansion or a rebuild there would involve losing some of the neighbouring car park.

At Cannon Hill, a 3069-square-metre single-storey building would be sited along the sloping ridge to minimise the impact on the views of properties along Merri Street.

It would include another 963-square-metres of outdoor space including an observational deck, ceremonial space, amphitheatre and art-based playground.

It would also feature an extensive cafe and wine bar to seat 50 people overlooking the foreshore as well as an auditorium style function room for 50 people.

The building would also feature a glass roof.

The project, which is on Crown Land, has been given in-principle support from the Department of Environment Land Water and Planning.

The location would tie in with the art gallery's focus on increasing Aboriginal storytelling and art and connect with Aboriginal cultural landscapes.

To cater for the gallery, half the parks along Artillery Crescent would have to go but another 40 car parks would be created on the eastern end of the site with a possible pedestrian bridge over the Flagstaff Hill.

The new site would bring in more visitors, the study found, and would drive down costs to for council while also bringing in more visitors to Flagstaff Hill.

Flagstaff Hill was ruled out as one of the sites for the new gallery as well as the former Warrnambool post office and the soon-to-be-vacant library.

A rebuild on the Flagstaff Hill car park was overlooked because of a "perceived misfit of trying to accommodate an increased Aboriginal storytelling and art exhibition into a colonial space with limited connection to natural landscapes", the report says.

Problems trying to store the valuable collection of art was behind calls to begin an investigation into the need for a new gallery.

"The limited space for unpacking, storage, conservation and associated back of house operations is placing council's $12 million collection at risk," it says.

The space is so small some parts of the collection are being stored "inappropriately" and significantly increasing the risk of damage.

Warrnambool has had a long history with the arts community with the city's museum and art gallery established in 1886 by retired police officer Joseph Archibald - who now gives his name to the famed art prize.

His eclectic mix of artworks and museum curios were housed in a building behind the mechanics institute in Liebig Street.

A century later, in 1986, a purpose-built home next to the Civic Green was opened and named after one of its champions, Sir Fletcher Jones.

Warrnambool's art gallery is the third oldest institutional collection in Victoria and the fifth oldest in Australia.

Today, 4000 of its pieces are valued at $12 million and another 1000 items valued at $75,000.

Visitation to the gallery grew from 47,000 to 67,000 between 2016 and 2019, and without changes to the existing art gallery building this is forecast to grow to 79,000 visits in 2027, including 36,257 from outside Warrnambool.

But with a new building, that could increase even further by 2027 with between 132,677 and 180,134 visits, depending on which site is eventually chosen.

The current gallery receives an annual subsidy from the council of about $600,000 each year, funded by ratepayers, but a new venue would be designed to make more of its own revenue and cost less to operate.

The gallery's annual loss would drop from $536,000 to between $200,000 and $300,000 a year - the Cannon Hill site flagged as the more profitable option.

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