A new feasibility study will propose transforming Otley Civic Centre – which has been closed since May 2010 – into a prestigious, 400-seat entertainment hub.

A working party has been working for months on a business plan that it hopes will prove the building could generate enough income to justify a re-opening and cover £120,000 a year running costs.

Full details will not be published until the study, the first stage of that plan, has been submitted to and scrutinised by Leeds City Council – the Civic Centre’s owners – in January.

But Otley Town Council’s cross-party working group this week said the focus would be on turning the currently closed property into a large events venue to draw people to the town.

Town council leader Councillor John Eveleigh (Lab, Ashfield) said: “The study takes a completely new approach to running the Civic Centre, based on the unique feature of the Grade II listed building, the large upstairs hall-cum-theatre space.”

The working group envisages overcoming those difficulties by adding one or two access lifts as part of a multi-million pound refurbishment scheme that would see Leeds paying the lion’s share of the costs and the town council contributing £500,000.

It is proposing that the hall be turned into a multi-purpose auditorium, with moveable seating, that could host a regular programme of large events. The group says its research suggests that such a venue, once established, could generate “most of the income needed to run the building”.

Councillor Carl Morris (Lab, Manor) said: “Our vision for the Civic Centre is that it becomes a destination venue drawing people into the town.

“We’ve researched other historic public buildings brought back into use after a period of decay, and found that a good quality venue can attract out of town visitors not just to events but to spend money in the town as well.

“Otley is full of entrepreneurs, innovators and creative people for whom this is a real opportunity.

“As well as an events venue, we want it to be a centre that actively showcases and promotes Otley’s small businesses, retailers, creative talent, and our range of independent food and drink outlets, as well as our countryside and heritage.”

The events hall – which could stage everything from concerts, theatre and comedy to indoor fitness classes and markets – would be supported by a bar, cafe, dressing rooms, studio space, meeting rooms, and possibly a ‘hot desk’ lounge for small businesses.

The study claims that a vibrant Civic Centre, alongside Otley Courthouse and the existing art galleries, music venues and shops would help create a thriving “creative and cultural quarter” at the heart of the town.

Working Group member and architect Mark Hide said: “We’ve had initial discussions with the Courthouse about how the two centres could complement each other, rather than compete, and a core aim is to make the Civic Centre into a valuable resource that contributes to Otley’s economic life.”

Coun Eveleigh added: “Leeds will first take a view on our study. If that view is favourable, there will have to be further rounds of consultation and negotiations to firm up the sources of capital funding, further refine the revenue business plan, build relationships with organisations and individuals who want to be involved, and ensure the building meets the needs of all its stakeholders and the wider community.”