Victoria’s proposed COVID-19 quarantine facility is dependent on federal funding and won’t be ready until the end of the year.

The state government has confirmed the preferred site for the facility will be next to the Mickleham post-entry pet quarantine centre, a Commonwealth site about 40 kilometres north of Melbourne.

The 500-bed facility would cost about $200 million to build, with a possible expansion to 3000 beds taking the cost to $700 million.

The state government has committed to paying about $15 million to get the project ready for construction.

A final call on whether construction goes ahead will not be made until September, with Acting Premier James Merlino saying it could be ready by the end of 2021.

“We simply do not know what our situation will be in September, this is about giving us options,” he said on Thursday.

The plan hinges on Commonwealth approval, with national authorities expected to pay for the build.

“The request to the Commonwealth is that they pay for the construction of this facility and ultimately take ownership of this facility,” Mr Merlino said.

The state government sent the business case for the site to their federal counterparts just a few minutes before Thursday’s announcement.

Victorian Opposition Leader Michael O’Brien said the government should have discussed the proposal with its federal counterparts.

“Sit down with the federal government, work it out, and get the right result for Victorians. Don’t issue a list of demands like some sort of terrorist or some sort of kidnapper,” he said.

But Mr Merlino described the $15 million spend on the Mickleham plans as a “no regrets decision,” saying that if it was rejected, the alternative was Avalon Airport near Geelong.

The new facility would be cabin accommodation, to be built as an alternative to hotel quarantine. It is still not clear whether the new facility could replace the quarantine hotel system entirely.

The facility will be based on the Northern Territory’s Howard Springs camp, with guests kept in separate cabins and more fresh air than quarantine hotels.

Mr Merlino wouldn’t confirm whether residents of Mickleham would be consulted on the plans, saying the project was subject to Commonwealth planning rules.

He also said there were other options for future uses of the site, such as emergency accommodation during bushfires and floods.

A purpose-built quarantine centre was proposed after February’s Holiday Inn outbreak, which sparked a five-day lockdown across Victoria.

At the time, Premier Daniel Andrews said Avalon and Melbourne airports were “standout candidates” as bases.

“It’s more than just scoping it, we are going to get on and build a facility. It’s just a matter of how big it is and the more precise details of where,” he said on February 16.

He said he expected some Commonwealth “involvement” to fund the project.

On Wednesday, Prime Minister Scott Morrison defended the country’s hotel quarantine system – which has been primarily the responsibility of the states – as “99.99 per cent effective” at protecting the community against COVID-19.

Victoria’s streak of no community transmission extended to 62 days on Thursday. There was one new case from overseas in hotel quarantine.

-with AAP