The change comes as figures show occupancy rates have plummeted since the gallery moved to Moray Pl.
But a decision on the future of the gallery, which Dunedin City Council staff say has not had a successful stint during its time in Moray Pl, may have to wait until its permanent home is decided.
The gallery was established by the council in 1997, but no policy framework or criteria for use was developed at the time.
Council marketing communications agency manager Debra Simes' review of the gallery, to be considered by the finance, strategy and development committee on Monday, said it was used by a wide range of individuals and organisations, mostly individual, non-commercial or recreational artists, and arts and crafts guilds and societies.
The gallery was relocated to Moray Pl from its former Princes St home in 2009, after the council decided to move the iSite Dunedin Visitor Centre to that site while the Municipal Chambers was being redeveloped.
The move generated complaints from some groups booked to exhibit at the gallery, who said they had been offered an inferior building in Moray Pl as an alternative.
For the review, staff consulted various arts organisations and arts festival managers, but because of cost and time, the wide array of gallery users had not been consulted "at this point".
Ms Simes said bookings had declined at Moray Pl, prior bookings were cancelled, and occupancy rates were 27% compared with 95% at Princes St.
"Tenants at the Moray Pl site have reported very low sales and visitor numbers."
The gallery provided a space for artists to "do their own thing" in terms of installation and management of an exhibition, though there were now several venues run along those lines.
The issues raised by the review included that there was a lack of vision for the gallery, it had an inconsistent image, and it was not a space for emerging or community artists as other cities provided; but also that existing users had a growing sense of ownership.
Making the gallery a community arts space would fill a gap in the arts sector, encourage public engagement, and focus on "doing" art, Ms Simes said.
"What is missing in Dunedin is a dedicated public space for the community to come together to undertake arts activities," she said.
The gallery had worked "particularly well" for activities such as lantern-making and choc-art workshops.
The option would not preclude current users, but ask them to think about how their use of the space could more actively involve the public.
Asked about the issue, the chairman of the finance, strategy and development committee, Cr Syd Brown, said the future locations of both the iSite and the gallery needed to be considered first.
