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The idea would have the Otago Polytechnic's learning centre relocated to the foyer of the Downes Room, inside the Mosgiel library, free of charge.
It was first raised by polytechnic chief executive Phil Ker last year, and presented to the Mosgiel Taieri Community Board earlier this month.
This week it was the turn of the Dunedin City Council's community development committee to discuss the proposal, prompting disagreement between some councillors about the merits of the shift.
Cr Syd Brown was among those to support the move, saying the centre's service was "really treasured" in Mosgiel and would be a good fit inside the library.
However, Cr Fliss Butcher suggested the centre's courses could serve to recruit students for the polytechnic's main campus and, if that was the case, wondered why ratepayers should be supporting the polytechnic's marketing.
Deputy mayor Chris Staynes - the council's representative on the polytechnic's council - disagreed, saying the courses were run at a cost and "very few" students went on to take fee-paying courses at the main campus.
"Some do, but it's not operated as a marketing exercise for the polytechnic," he said.
The centre was one of three operated by the polytechnic offering free and introductory courses, but was under pressure from Government cuts to community education funding, chief executive Phil Ker said last month.
A report by council library services manager Bernie Hawke to this week's meeting, recommended using the Downes Room foyer over four other options, including refurbishing a male staff toilet to create space for the centre.
The foyer space was under-utilised, and the centre would have "synergies" with the library and the council's digital strategy, while ensuring the community continued to benefit from the courses offered, he said.
However, Cr Lee Vandervis worried a precedent might be set and also wondered why ratepayers should subsidise the polytechnic.
Mr Hawke said a failure to support the centre would likely see it close, leaving just two centres in central Dunedin and forcing Mosgiel residents to travel to study.
"They would basically just retract the service," he said.
Cr Staynes said he did not believe the support amounted to a subsidy, but would allow the service to continue in Mosgiel.
"If we don't wish to do that then the polytechnic will make other plans," he said.
However, Mosgiel Taieri Community Board chairman, Bill Feather, also took issue with the move to the foyer space, telling the meeting the Downes Room foyer was needed for Civil Defence purposes and other events.
He said the board favoured refurbishing the staff toilet - at an estimated cost of $20,000 - to make room for the learning centre instead.
Following the debate, councillors voted to ask the council's city property department to consider refurbishing the toilet area for use by the polytechnic, with a report on funding sources to be presented to the council on February 21.