The Catholic Diocese of Charlottetown has awarded a multi-million dollar contract to start construction on a new religious retreat centre in Bayview, a few kilometres west of Rustico.

MacLean Construction had the $2.9-million winning bid.

The new centre will replace Belcourt Centre in Rustico, which expected to close in February or March of 2017.

Many in the Rustico area have been fighting to keep the old centre open, arguing it is an important historical landmark but the Diocese said the cost of renovating would be prohibitive.

Gerald Gabriel with the Diocese said the old centre can't offer what the new one will.

"The facility in terms of conference rooms and breakout rooms will be more adequate for an efficient retreat house operation," he said.

Gabriel said the new chapel will have approximately 38 rooms, each with a private bathroom, and will be able to house 55 to 60 people. The existing chapel can house about 30 people.

Gabriel said a groundbreaking ceremony will be held on Tuesday, March 29. It will include a blessing of the land, which was donated by Fran Sark.

Construction is expected to begin in early April with completion by the end of the year. Once completed, the new centre will be considerably larger.

As for the old Belcourt centre, the Diocese has heard from a few parties interested in taking it over. Ideally it would be sold to a group that would renovate the building for another community use, Gabriel said. He said those negotiations are still at a very preliminary stage.