The future of the site has long been in question after a five-storey apartment complex and medical centre was previously approved for the site in 2012, but works never started on the project.

In 2017, plans were approved by the Victorian Civil and Administrative Tribunal for an 80-space car park on the site, but that project also failed to come to fruition.

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Councillors will decide whether or not to approve the 59-apartment development at 6 Lyons Street North, which is also planned to include six specialist housing dwellings along with three townhouses and a cafe.

Council officers have recommended council approve the infill development, citing net community benefit through increased inner-city population, retention of part of the former building, inclusion of specialist housing and addition of contemporary architecture to Ballarat.

The proposed development comes as construction on the 27-apartment Nightingale complex at Davey Street nears completion.

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The 2191-square metre site was formerly a music hall building associated with Loreto College. It was damaged by fire in 2011 and is currently structurally unsound, requiring extensive repair work.

Part of the music hall will be retained to be used as a licenced cafe while the rest would be demolished to make way for the residential development.

The cafe would be open from 7am to 4pm Monday to Friday and 8am to 4pm on weekends with a liquor licence in place for the serving of alcohol with meals.

The complex is proposed to be three-storeys tall at the Lyons Street North frontage and tier away from the street, reaching a five-storey base with two upper levels.

Six of the 59 apartments are proposed to be used for specialist housing, which could including specialised disability housing.

The three townhouses are proposed to be three-storeys tall with living and outdoor areas on the ground floor and bedrooms on the upper levels, but conditions on the permit's approval recommended by council officers would have the townhouses reduced to two storeys.

The apartment have been designed to provide access to an underground car park via Dawson Street North. The site's existing vehicle crossover at Lyons Street North would then be replaced by additional on-street parking.

The underground basement car park would have space for 55 cars, 50 bicycles and five motorcycles. A single car park would be assigned to 55 of the 56 dwellings, while none have been allocated for the specialist housing units.

While planning scheme clauses prescribe a development of this size to include a total of 86 parking spaces, council officers said there was a market for dwellings without included parking spaces and 31.3 per cent of one-bedroom residents and 20.9 per cent of two-bedroom residents do not own or park a vehicle at their place of residence.

Council officers said the redevelopment of the site with 62 dwellings would assist in 'achieving a more compact urban form', take advantage of a strategically located site on the western edge of the CBD, located within walking distance of the CBD and Ballarat station, and add diversity to the city's housing market which mostly consists of a single dwelling on a lot.

"The development provides for an intensity of housing which has not been seen in Ballarat previously. As housing prices escalate, and as the population becomes more mobile with working from home opportunities, apartment style living becomes more popular. In allowing 62 dwellings on the site, council will allow an increase in population surrounding the CBD," the officer report said.

"As apartment-style living and denser developments are constructed, in line with the vision of the planning scheme which encourages more housing in and surrounding the CBD, the CBD will evolve and provide different services while more people accessing the CBD and moving through it will assist in creating a safer urban environment."

If approved, the permit would expire if the development does not start within two years, it is not completed within four years, use does not start within two years of completion, or its use is discontinued for two years, with options for those periods to be extended, if necessary.

Of the 17 submissions council received regarding the application, 11 objected to the development, citing issues around traffic and parking, height and impact on heritage streetscape.

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