The funding was allocated in the 2015-16 budget after Councillor Michelle Sutherland initiated the proposal last year.
At last week�s council meeting, Cr Sutherland moved to develop a community arts program including guidelines and possible membership for an arts selection panel.
As part of the motion, the panel would encourage local artists to apply for a grant to develop public artworks within the City.
Cr Sutherland said the idea was to bring public art to the foreground and to engage with local artists, including students from Edith Cowan University in Mt Lawley.
She noted good examples of public artwork were displayed in the cities of Stirling, Vincent and Perth.
One of the latest public artworks within the City of Bayswater, commissioned by council, was completed recently on the WA Home Loans wall at Progress Street in Morley.
Cr Barry McKenna said developers within the City were required to spend 1 per cent on artwork and suggested council could arrange a deal where that money was cumulated in areas and put into themed public artwork displayed on streetscapes.
The policy applies to developments with construction worth $1 million or more.
According to the council agenda, almost all developers to date elected to install public art on their own site and therefore there was not a public art fund available for the City to install such art.
Mayor Sylvan Albert said developing a panel was a great idea to identify how to spend allocated funding for public art.
He suggested engaging with the West Australian Junior Orchestra and WA Ballet company, both based in the City, for possible public artistry.