City of Newcastle says it will fund redevelopments of Newcastle and Merewether ocean baths after its expression of interest process failed to attract acceptable plans from the private sector.
The council said the EOI process had been "unsuccessful" with "no submissions progressing beyond an initial panel review".
It will now form a community reference group to guide the restoration of Newcastle Ocean Baths, and one for Merewether later this year.
Newcastle lord mayor Nuatali Nelmes said the consultation conducted alongside the EOI process had offered valuable feedback.
She said she was "determined" to see Newcastle Ocean Baths "become an asset all Novocastrians can be proud of".
"This means converting feedback from the community engagement process into the preliminary design that, once costed, can be further tested with the community to ensure Newcastle Ocean Baths receives an appropriate restoration 98 years after it was first built," she said.
"We've made a great start on understanding what the community want from the baths with more than 600 comments logged.
"We'll now progress with forming a community reference group that represents user groups, the local business community and broader ratepayer base with the aim of holding our first meeting next month."
The Newcastle Herald understands only a handful of EOI submissions were lodged and failed to contain the level of detail required for further consideration.
Launched in October, the EOI process received a lukewarm response from some Novocastrians, who formed a community group opposing private redevelopment.
A group of East End business owners did unveil plans for a "Beach, Body and Baths Club" at Newcastle, pitching paid parking along Shortland Esplanade to subsidise the pavilion renovation.
City of Newcastle director of infrastructure Ken Liddell said the council would review the community engagement results before preparing draft concept plans.
"Community consultation will be maintained through a reference group, while information sessions and a public exhibition will be held to present concept plans to the broader community before councillors review and approve any restoration," he said.
"I expect the concept plan will be completed this year with detailed design works to follow in preparation for construction work to start in 2021."