The report updates the council on its application to the State Government for funding to build a 100sqm multi-purpose room at the Yanchep sports facility.
It said the Department of Sports and Recreation had not deemed the $295,000 project likely to increase physical activity, so had not approved the City's request for $98,333.
"Projects are evaluated on the premise that they will increase physical activity and be multi-|purpose in function," it said.
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READ NOW"While the facility will be multipurpose in nature, it was not seen to increase physical activity."
The report recommends the council approve covering the full cost for the extension from its strategic projects and initiatives reserve.
It said the department had approved part of an application for funds for upgrades at Warradale Reserve in Landsdale, but there would be a $25,000 shortfall that the City could cover.
"This report highlights a more significant issue regarding the pressure on the City's financial capacity to deliver the large backlog of sporting infrastructure required to cater for the needs of a rapid growth area," it said.
Councillors will consider a recommendation on Tuesday that the Mayor ask Sport and Recreation Minister Mia Davies to allocate more money to the fund next year.
The council decided last October to extend the changerooms, adding a multi-purpose room, following calls by the Yanchep Red Hawks Football Club for a facility upgrade.