BENDIGO can fix a Barnard Street 'eyesore' and repay a loan of up to $2.75 million plus interest, its councillors believe.
The City of Greater Bendigo would still pay "considerably less" interest on the sum than it would for a typical bank loan, council officers say.
The state government money would help do up a dilapidated pond next to the Faith Leech Aquatic Centre.
The water-body was once a section of the Bendigo Municipal Baths - a large public swimming hole spreading to Camp Hill Primary School and towards the Queen Elizabeth Oval that was mostly filled in by the 1950s.
Without a loan the council would have to postpone design and construction work for several years and find money either out of grants or its own pockets, officers had warned councillors in a report ahead of a the decision.
"In case the ... funding is not received, there is a design fee shortfall of approx. $60,000 for the 2019/20 financial year," they wrote.
"A further $120,000 in design fees will be required in 2020/21 to complete detailed documentation".
Councillors last week appoved the application.
Their vote could not come soon enough for some councillors, and not just because without it they would miss an application deadline set by the state government, councillor Matt Emond said.
"It does look a little like a set for Swamp People," he said, referring to the reality TV show in which alligator hunters roam the remote and untamed bayous of Louisiana.
"It is an eyesore and it needs work. It's a bit of a blemish on our beautiful Rosalind Park precinct."
A previous master plan for the Rosalind Park precinct envisioned boardwalks, barbecue shelters, pathways, trees and a lawn for the weed-infested, overgrown area currently fenced off from the public.
While the loan would impact the council's debt sustainability ratios, councillor Andrea Metcalf was confident they would not move above its current low risk rating.
"I can't wait to see the design of the baths," she said.
Cr Metcalf was confident the project could be completed within 36 months of a loan agreement being signed - a condition all councils that locked in funding would have to meet.
The council previously earmarked $100,000 for the project.
More on the baths: