We have to balance talking about death with the innocence of children. With a child, you’re concentrating on making their final days happy and taking away fear. Unlike with adults, the process of their death isn’t in the children’s hands – their parents and professionals will do what’s best for them.
In helping the child come to terms with death (if, indeed, that’s what the parents want), different parents will deem what’s right for their children. Placing a cemetery next to a children’s hospice takes away some of that parental choice, specifically the choice of some parents to avoid what might be morbid or fearful for their child - even though some parents might find it a positive stimulus for initiating conversations about death.
The council should exhaust all other possibilities.