Councilwoman Diane Williams and Mayor Dennis Michael indicated there is available land in other areas of town, such as the more commercially developed areas along Foothill Boulevard.
Such development, they said, would probably not create the kind of resistance from residents that SCI faced for months.
Dann Narveson, a real estate director for SCI, said executives are still determining how to move forward.
After the City Council's Nov. 7 denial, Narveson said the possibility of SCI developing in another part of the city is being given "a great deal of consideration."
City leaders said a major factor in the denial of the permit came from the emotional distress residents testified would occur if the funeral home was built near their homes.
City officials cited a development policy in the city's general plan aimed at protecting neighborhoods from "encroachment of incompatible activities or land uses that may have a negative impact on the residential living environment."
Associate City Planner Mike Smith said the policy provides instruction for council members to deny projects that would harm a neighborhood.
"There's no means to measure this discomfort and no means to mitigate it, but the significance of this discomfort cannot be disregarded and must be considered when determining the compatibility of a project with its surroundings," Smith said.
Williams said SCI is welcome to bring the funeral home to town, although such projects shouldn't intrude on an already-established neighborhood.
"There are a lot of other places they can go," said Williams, suggesting a better place would be an area that is at least three-quarters commercially developed.
"There are several empty buildings on Foothill, and there are empty spaces."
Williams said she was concerned that children who live near a proposed funeral home would encounter people in mourning or in "emotional states" on a regular basis.
Michael, who also indicated the funeral home could find a more appropriate spot along Foothill Boulevard, agreed with Williams.
"The No. 1 factor was what the psychological impact would be in the neighborhood and for the youth living there," Michael said. "Families that live and purchased their homes there never once thought there would be a funeral home and the reminder of death on a daily basis when they walk out their front doors or look out their windows."
Councilman Sam Spagnolo said there were "a lot of areas in the city that would best fit the funeral home based on traffic and proximity to restaurants."
"There are a lot of areas the Planning Commission is willing to sit down with SCI and discuss," Spagnolo said.
Councilman Bill Alexander said Rancho Cucamonga can accommodate the funeral home, although "the location was a problem."
Alexander cited the impassioned testimony of residents against the project being located at the proposed site.
"I don't think it would have been a positive change for Etiwanda," he said.