A 170-place childcare centre will be built on the site of a Yarraville petrol station, despite concerns about traffic and site contamination.

The state’s planning tribunal has overturned Maribyrnong council’s rejection of the private centre, planned for the site of the National Lube petrol station at the corner of Williamstown Road and Francis Street.

Council refused initial plans for a 206-place centre in May on grounds including building form, parking, interface with residential properties, excessive signage and site contamination.

The applicant, Southern Capital Corporation, appealed to the Victorian Civil and Administrative Tribunal (VCAT), lodging amended plans for a two-storey child care centre with roof terrace playground for 170 children.

The council argued the site was inappropriate for a childcare centre, and that traffic would unacceptably impact Dean Street. It also said the applicant had failed to adequately address the possibility the site is contaminated.

VCAT member Michael Nelthorpe rejected all of council’s arguments, saying the traffic impact could be overcome if parking on Dean Street was prohibited during peak hours.

Mr Nelthorpe found the built form to be acceptable and that noise from traffic and the centre could be managed.

He also found the council had erred in categorising a childcare centre as a commercial activity requiring a more central site.

“I am not persuaded that the council has properly applied its planning policies to this proposal.”

The council argued that soil investigation works should have occurred as part of the permit application process, given the site’s history as a petrol station.

However, Mr Nelthorpe agreed with the applicant that the matter can be addressed by conditions on the permit.

“The critical matter is to ensure the site can be used for a childcare centre before the use commences, rather than before the permit issues.”

The decision comes as construction begins on a new 100-place private childcare centre on the corner of Barkly and Gordon streets in Footscray.