Blake Family Grocers owner Brendan Blake said the decision of three councillors to vote against the opinion of council officers was 'bewildering' and he was considering options to move forward with plans.

"VCAT is certainly our option. There are some other strategies we may undertake," he said.

Mr Blake plans to open a Blake Family Grocers store at 47 Albert Street in Creswick, between The Farmer's Wife retail store and the old British Hotel.

HAVE YOUR SAY AT THE BOTTOM OF THIS STORY

The building was previously used as a Foodworks supermarket until October 2017 and has been vacant for many years.

The planning permit application for alterations and additions to the building, signage, a waiver of required on-site car parking and the sale of liquor was referred to council after Hepburn Shire received eight objections.

Acting co-ordinator statutory planning Pauline Maltzis recommended councillors vote to issue a planning permit with conditions at a council meeting on Wednesday night.

Her report included in the council agenda said the application aligned with the shire's economic development strategy and provided an opportunity for increased employment and improving visual amenity of the building.

The site and the old hotel building next door have not been used for many years and are considered an eyesore by many on the street.

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It said the proposed alterations were 'moderate renovations' to the building and were in accordance with the council's heritage policy.

The planning department found there was no issue with the liquor licence and it was sufficient to waive the usual requirement to provide 34 on-site car parks for a building of this size.

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A traffic report found there were a minimum of 77 vacant car spaces within convenient walking distance of the site during peak utilization periods and it was not feasible to provide additional on-site parking.

The business proposed to use the laneway beside the building for loading and unloading.

But under proposed conditions council planners would have required one of the car parks on Albert Street next to the laneway to be changed to a loading zone instead for loading and unloading.

One objector said during the council meeting this arrangement was of 'great concern' as it would 'undoubtedly' have impact on pedestrian movement in the zone.

The objector said the proposal required mandatory referral to the Department of Transport but council's planning department said it did not because it did not alter access to the road.

The director of IGA Creswick Steve Sellars and owner of a laneway that provides access behind 47 Albert Street made an objection to the planning application and spoke at the council meeting on Wednesday night.

He also operated the Foodworks that was based in the building until October 2017.

He raised concerns about loading and unloading activity on his private road behind the building, but this was not part of the planning application because the business does not plan to use the private road.

Another objection was lodged by a resident who lives behind the property and uses the laneway beside the building.

Other objectors raised safety concerns about trucks accessing the small laneway and limited pedestrian visibility.

Councillor Don Henderson moved an alternate motion to refuse to grant the permit on the basis the waiver of the car parking and removal of a car park would result in detriment to the surrounding area.

He said he was also worried about the risk to the public on the roads adding deliveries to a busy street.

"It is going to be a problem into the future as Creswick gets busier. I think we are throwing disaster into the street. I don't want to be a part of that," he said.

Cr Brian Hood seconded the motion also raising concerns about the waiving of the requirement for 34 on-site car parks.

Cr Juliet Simpson also voted in favour of the refusal motion, while Cr Jen Bray and Cr Lesley Hewitt voted against it.

Mayor Cr Tim Drylie declared a conflict of interest and removed himself from the meeting.

He told The Courier he owned a shop near the site which could benefit from the granting of a planning permit and a family member worked at IGA Creswick.

Many community members shared their disappointment about the planning application being knocked back on social media, saying they were looking forward to the new shop that would be an asset to the town.

Mr Blake said he had negotiated with council's planning department over many years to be in position where they would recommend the approval of a planning permit.

"The basis Cr Henderson claims he rejects the application was the removal of a carpark on Albert Street," he said.

"The loading bay was a council condition we had nothing to do with. The councillor was objecting to council's permit conditions. That is a bit strange.

"We were not given the opportunity to negotiate this apparent issue at any time."

Mr Blake said he was confident his business plans would come to fruition despite the setback.

"The site is zoned business one. The supermarket use is as its right, it doesn't require a permit to run a supermarket. I am absolutely confident we will get there," he said.

"The Blake Family Grocers model we are running in Daylesford and Ballarat is an example of what will come to Creswick.

"It really is an amazing supermarket model and that is what Creswick is looking forward to getting."

Mr Blake said tourism in Creswick was coming alive with businesses like Le Peche Gourmand and other new shops.

"The Blake Family Grocers to liven up that dead corner will be fantastic for the township. Everybody will do well out of that," he said.

"Everyone will spend more time on the street, there will be energy o the streets. Creswick is coming alive."