The City will soon invite proposals for up to a 21-year lease for the lot King Carnival is currently situated on.
Mayor Rhys Williams said the next piece of the city centre redevelopment was about encouraging private investment to the site.
"The Western foreshore is a key part of the Mandurah City Centre transformation and there is an opportunity to seek significant investment on this site with a long-term commitment," he said.
"With the ability to open up a long term lease, the successful proponent will have the confidence to develop this significant piece of land into something exciting and beneficial to the city and community, that will help achieve our vision for Mandurah's future.
"We're encouraging anyone in our community with relevant business interests to talk to us."
If he's successful in getting the long-term lease, King Carnival owner David Miller said he would spend millions of dollars on upgrades.
Over the past 18 years, Mr Miller's renewals have been for one to five years. He says he has been waiting since 2003 to get a long-term lease.
"You can't do a major upgrade when you only have a short lease," he said.
"For a brand new amusement ride it's $1 million - who's going to spend $1 million on a ride for two years?
"We've spent money on small rides over the years but we can't get anything substantial until we have a longer lease."
Three years ago, Mr Miller's company put an application into the City of Mandurah for a major upgrade, based on concept plans by a leading Queensland amusement architect.
Plans included $1 million to upgrade the mini golf course and $100,000 for a new lighting package for the iconic 60-year-old ferris wheel.
"Years ago we put in a proposal for what we wanted to do to upgrade the carnival but we never heard anything back," Mr Miller said.
"Our upgrades would bring more people to the western foreshore - we want Mandurah to be successful like anybody else."
Operating in Mandurah for 66 years, Mr Miller said it would be devastating for the community to lose King Carnival.
"It's a really successful business - we had 500 people at the carnival just on Wednesday night," he said.
"There's people who came fifty years ago still coming here.
"Residents always tell me they used to come down with their parents now they bring their own kids - people come down from Perth specifically for King Carnival."
Since 2021, residents have been petitioning for the City of Mandurah to renew the lease for the iconic carnival on the western foreshore.
The petition started by resident Sharon Johnson to save the carnival has attracted almost 1500 signatures.
The Expression of Interest process for the lease will commence in February via a leasing agent.
In the interim, for additional information about the western foreshore site contact Ann Harrop, Senior Planner at the City of Mandurah.