THE Trentham Hub proposal has missed out on federal funding, putting a halt on construction for months.
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The $3.6 million 'Mechanics’ centre will include a library, meeting space, commercial kitchen and visitor information centre.
It hinges on federal, state and council funding.
Hepburn Shire applied for $1.1 million in the National Stronger Regions Fund, but will now have to reapply for round two of funding.
Community Reference Group chair Susie Spence said after five years of hard work, it was disappointing to see the project miss out.
“This has taken up a huge amount of several people's time and of course it's really disappointing,” she said.
“I think the project (could be delayed) for a lot longer and that's very sad.”
Hepburn Shire will contribute $500,000, and has also applied for $1.1 million in state government.
The community will contribute $200,000.
If council misses out on round two funding, they will have to look at other options, community services general manager Kathleen Brannigan said.
"If we can't get (federal funding) we would have to seek it elsewhere or would look at the concept plan and see if we can make it smaller,” she said.
“For now we'll be having the conversation with the state government and community in the next couple of weeks.”
Ms Spence and Ms Brannigan both spoke about the sentimental value of the current Mechanic's Institute, which will be demolished to make way for the new centre.
“People had weddings here and events and these are values embedded into Trentham,” Ms Brannigan said.
“We are hoping to translate them into the new facility.
"We will retain some of the social history by restoring the old curtain and displaying some memorabilia.”
Ms Spence said the building structure itself had lost significance due to past renovations.
However she said the reference group was seeking ways to resolve divisive issues in the community.
“We still very firmly believe in this project and think it's the way to go.”
The idea for the hub came after a Trentham Community Facilities Review found that a new facility was needed to cater for projected growth over the next 20 to 30 years.
The study found that bringing services together would reduce maintenance and running costs, bring community groups together and put less strain on volunteers.
Several locations were considered, but much of the community preferred the Mechanics Institute site, says the Community Reference Group.