The City of Launceston council is racing against time to establish a new project which would enable use of a $10 million Building Better Regions Fund grant that is due to expire on December 31.
The latest project would involve construction of a multi-storey building on the site of the Birchalls building in the Brisbane Mall.
It is understood the project was considered at a closed session of council before the council elections.
While the federal Government scrapped round six of the BBRF grants in the recent Budget the City of Launceston's BBRF grant is a round four project.
A spokeswoman for Infrastructure, Transport, Regional Development and Local Government Minister Catherine King said: "As per the grant opportunity guidelines projects funded under Round 4 of the Building Better Regions Fund must be completed by 31 December 2022, with all funding expended before June 2023.
"However, grantees can request to extend the timeframes in their grant agreement, which would be considered according to Section 12.5 of the grant guidelines.
A funding agreement, under which payments would be made on the achievement of set milestones, was never finalised between the government and the City of Launceston because a sale of the $12 million Birchalls car park site at 41-55 Paterson Street was never completed and a $90 million Creative Precinct development did not proceed.
Launceston Mayor Danny Gibson said: "Discussions with the Federal Government in regards to the BBRF are ongoing.
"The expressions of interest process for the development of the Birchalls building is expected to be concluded in the coming months," he said.
"The Council looks forward to making an announcement on the outcome once that process is complete."
The council would not say whether an extension of timeframes had been requested under Section 12.5.
A spokesman said: "The council advertised an expressions of interest process for the redevelopment of the Birchalls building in 2020. "At the time, council received 11 applications from developers."
"After an assessment process, the most suitable candidates were shortlisted."
It is understood the latest proposal is centred around the Birchalls building which the council bought for $8.4 million.
An option being considered is for Birchalls building to be sold to a Sydney development firm Bricktop Group Pty Ltd for $6 million. Bricktop Group did not respond to a request for comment.
The Examiner understands the developer would build several levels on top of Birchalls and hand back to the council two levels of undeveloped floor space for its own use.
The City of Launceston would spend $1.7 million on developing its planned arcade linking the Brisbane Mall and the 41-55 Paterson St site.
Birchalls car park owner Car Parks Super Pty Ltd has a proposal for a $60 million development on the car park site which was refused by the council.
An appeal is due to be heard by the Tasmanian Civil and Administrative Tribunal on December 1.
The council has previously expressed a desire to build a bus interchange on the Birchalls car park site.
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