'I'm keen we get it right': Sheffield museums boss says library and gallery building could become 'vital and vibrant cultural destination'

But Kim Streets, chief executive of Museums Sheffield which will be heading the scheme, said the city needed to 'get it right' and show true ambition if the vision was to be fully realised.

The idea of converting the venue into a luxury hotel failed to gain momentum. The council's Chinese investment partner Sichuan Guodong Group, which had been exploring the feasibility of funding a hotel and keeping a gallery at the Grade II-listed Graves building on Surrey Street, decided the project would be 'very difficult' because of the significant costs involved.

The proposal now is to transform the building on Surrey Street into a 'cultural hub' - a place where Sheffield's full art collection can finally be displayed alongside touring exhibitions, space for performances, music and a restaurant. The library would move to a new, £20 million multi-purpose facility, with a site in the new retail quarter between Charter Square and Barker's Pool emerging as the frontrunner.

"I would like to see us be ambitious, and work really closely with the city but with partners as well, to make sure we really realise the potential of that building and what a vital and vibrant cultural destination it could be," said Ms Streets.

"I'm keen we do something and that we do get it right. I feel very positive about the role of the building and its collections and what it could be, but we need to sit down and thrash that out, and ask the people of Sheffield what they would like to see in it as well."

A previous estimate to renovate the Art Deco building, which dates from 1934 and needs extensive repairs, was put at £30 million, but the council has suggested the cost of a new redevelopment could be far less. Bids to the Arts Council and heritage bodies are expected.

Ms Streets admitted the Graves building, with its library, gallery, theatre and IT suite, could already be described as a cultural hub, but said a new complex would have a more modern outlook.

"What I think is meant by it is a space for people that is democratic, accessible for everyone to enjoy, but has some of those components in it.

"From our perspective what we can see is a building that is the jewel in the crown of Tudor Square. With the right vision and imagination, and of course support and funding, we could transform that into a fabulous cultural centre."

The ambition of a ‘Hepworth for Sheffield’, referring to the popular gallery in Wakefield, has previously been expressed.

However, Ms Streets said: "I think it's a bit too early to say that's what we're going to create. It might have some of the best of the Hepworth, or the Manchester or York Art Galleries. We can see beacons of excellence around the country, and I think we need to look at all those fantastic sites and think what we could bring to Sheffield."

She said Sheffield had a 'very large' art collection, including pieces by Turner, Cezanne, Bridget Riley and Paul Nash, adding that, like many museums, only a small proportion of the work kept in storage was on display.

"We'd like to show more of Sheffield's collections then, as we do in the Millennium Gallery and Weston Park Museum, showcase some of the best of the rest."

Past successes have included visits by the Tate's Artist Rooms series, bringing exhibitions by Andy Warhol and photographer Robert Mapplethorpe.

"It's about getting the balance right between the collections we hold and what we're bringing in."

Thorough discussions about the scheme would be needed, said Ms Streets.

"We're hoping to have more conversations with the council about what kind of resources are required. There's a lot of work to be done. We've had a year of thinking of it as being a hotel and now we've got to look at all the options."

The council has said the hotel scheme could still happen elsewhere in the city centre. A consultation on the library is to start early in 2018.