The redevelopment of Thornbury's Armstrong Hall could be scrapped with the facilities instead moved to Turnberries Community Centre.
A £5million redevelopment project was given the green light in 2018, but the financial impact of Covid-19 has reduced the likelihood of raising the necessary funds.
Numerous fundraising concerts have been held in recent years, but in June it was announced the hall would remain closed for the 'foreseeable future', with five jobs lost as a result.
The move to Turnberries had originally been rejected in favour of rebuilding the hall on its current site, but is now seen as the best way to safeguard the facility.
South Gloucestershire Council, the Armstrong Hall Trust and the trustees of the Turnberries Community Centre are currently in discussions.
Cabinet member for corporate resources, Ben Burton, said: “The council welcomes the decisions by the trustees of both centres to explore joint working. We believe it will be worth the effort if the discussions are able to result in an improved range of facilities for Thornbury.
"We don’t underestimate the complexities of such a project, but we will do everything possible to support this development.”
Thornbury mayor Jayne Stansfield said: “We know how much the community values the Armstrong Hall, but we feel it is important for the future of Thornbury that as the town grows it has the community facilities to enable it to thrive.
"We will continue to investigate all possible options to create a venue that is suitable for the community and that of developing Turnberries is one that seems most likely to succeed in the current financial situation.”
The potential development was also supported by the trustees of Thornbury Community Building Trust, which operates Turnberries.
A spokesperson said: “As an existing thriving and financially viable centre we welcome the opportunity to discuss how we can continue to develop to ensure the people of Thornbury have access to high quality community facilities that meet both our needs and the needs of the whole community.”
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