In an emotionally-charged chamber, councillors grappled with honouring their commitment to the community against a 50 per cent hike on the project's budget at Monday night's meeting.

A shell of the former historic council-owned building at Booragul is all that remains after it was gutted by fire in 2019.

After an extended confidential session, councillors emerged conflicted.

The total bill for the project has skyrocketed to $7.8m due to "significantly higher" than expected tenders that dwarfed the $5.2m it had set aside.

Liberal councillors Jason Pauling and Jack Antcliff both objected to forking out extra funds, arguing the council has a financial responsibility to the community.

"There is no doubt this will be a show piece, the bit that gets me though, is at what cost?" Cr Pauling said.

"There are sectors of the city that I suspect don't even know where it is, and have certainly never dined there, that's where I start to struggle.

"It's very clear that I'm uncomfortable with where we sit and when I weigh up the social benefit versus economic, for me, I arrive at a situation where I cannot support this."

After the fire, the council's insurer agreed to a $2.82m pay out for a like-for-like replacement contingent on a construction contract being awarded.

The council had already set aside $2.4m for the project.

According to a council spokeswoman, the price hike is the result of increased construction costs and the complex nature of retaining heritage elements.

She said the projects that money would be taken from to pay for Awaba House include works at the council building, depot facilities and minor improvements to council's holiday parks.

"The delivery of Awaba House revitalisation will not impact any planned community projects, such as footpaths, playgrounds or other similar facilities," she said.

"The projects will be deferred to the 2025-2026 and 2026-2027 financial years."

Cr Antcliff said despite the site's history and the promise made to the community to rebuild Awaba House, it was not the time to be "brave".

"I think in this scenario, we need to be a little more considered," he said.

"I don't think now is the right time, I acknowledge the history, the heritage value and community connection, but from a financial responsibility perspective I can't support this."

Since it burned down, the council has been busy planning its revitalisation as a restaurant, cafe and function centre.

Councillors were given four options; to dish out the extra money and move ahead as planned, to do nothing, do something else or do less.

If the council decided not to move ahead with construction, it would have lost out on $1.92m from its insurer.

Labor deputy mayor Madeline Bishop said she regularly fields questions about when the site will be rebuilt.

"The constant in all of the discussions has been the community's expectation that Awaba House was to be restored, for it to rise like a phoenix from the literal ashes and to restore the heritage elements where possible, whilst making a modern hospitality and function space," she said.

"Throughout this time, the message to our community in response to this consultation is simply that Awaba House will be revitalised, it's on our website in black and white, actually it's in blue and white.

"As a council, we made that commitment and when a commitment to provide for the community is made, the commitment should be fulfilled."

The tender for the project was issued in June, last year, and closed in September.

The council received nine submissions, which it said were higher than the pre-tender estimate report and allocated budget.

Labor mayor Kay Fraser said she remembers the night it burned down and the public outcry that followed.

"I remember our promise and our commitment to the community, we said, and I said, 'We will rebuild Awaba House'," she said.

Cr Fraser said that just because community assets do not always earn a huge return on investment does not mean they are not valuable.

"Not everyone uses our walkways, not everyone uses our pools and not everyone has used Awaba House, but they're all important, they're all significant and Awaba House is iconic," she said

"I will not let the community down by voting against Awaba House to be rebuilt and I'm very proudly saying that tonight councillors.

"I think you should be on the right side of history and be on the right side of what's right for this community."

Her sentiments were echoed by Independent Cr Kate Warner, who said despite the circumstances, the council had made a promise to the community.

"It's unfortunate that we need to reallocate funds from other places, but in order to rebuild this iconic building that may need to take place," she said.

"I actually see that it does fit within our strategic priorities, it is about balance."

The build is expected to take 12 months, with the works able to be completed in 2025 after the council voted to push ahead.