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A $21.5 million theatre seating 350 to 450 people could be built in the Octagon.

Dunedin city councillors have identified the Athenaeum building in central Dunedin as their preferred site for a mid-sized theatre, but redevelopment of South Dunedin’s Mayfair Theatre is an alternative option.

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Two other sites in central Dunedin — Sammy’s in Crawford St and the former Fortune Theatre in Stuart St — have been ruled out.

Development of a mid-sized theatre is not yet certain, but the project has been included in the council’s draft 10-year plan for public consultation.

Councillors decided at a meeting last month to include the project in the draft plan.

The meeting was not open to the public.

Councillors included $17million for development costs and a further $4.5million for operating costs.

The Athenaeum is owned by Zeal Land Ltd and the council could pursue a partnership with the company.

The building hosts a library that has been in existence for 150 years and it is not known if the library would seek an alternative site or still be accommodated within the building.

Athenaeum building owner Lawrie Forbes, a heritage enthusiast, said his vision for the building was to have it rejuvenated and reused.

It had 2000sqm of floor space, he said.

Alternatively, the council could work with the Mayfair Theatre Charitable Trust to redevelop its theatre and possibly buy its building.

Both are heritage buildings and would need big changes to make them fit for purpose.

The Fortune Theatre, which put on professional theatre productions, closed its doors in Stuart St in 2018.

Council community services general manager Simon Pickford said developing options for a mid-sized theatre followed the Fortune’s closure and a study by the council and Creative New Zealand looking at the future of the performing arts in Dunedin.

A theatre of such size could plug the gap between the Regent Theatre and smaller venues and cater for the needs of touring performing arts companies, he said.

The 10-year plan is subject to public consultation, which begins in late March, followed by further council deliberations, before the plan is signed off in June.