The council has given Sichuan Guodong Group - with which it signed the deal in June - 12 months to get the ball rolling by exploring the feasibility of plans to redevelop the Grade II-listed library building.
Should the firm decide to go ahead with the project, the Graves Gallery would remain part of the building, with full public access. But the council would move the library service to a new, modern home ‘in the heart of the city’.
The firm’s plans for a £30million residential development off West Bar, near the Aizlewoods Mill business complex, along with an education partnership and trade deals with two Chinese cities, have also been revealed in a report ahead of a cabinet meeting next Wednesday.
Council deputy leader Leigh Bramall said a five-star hotel was ‘key’ in order for the city to compete with other cities for investment.
“Sichuan Guodong have approached us to say their initial preference is the Central Library building,” he added.
“We are aware that it is a much-loved building so we want to manage that carefully. We have no idea if it’s going to be viable. We have agreed on a 12-month exclusivity period to establish if it’s a goer or not.
“It’s an exciting opportunity because it has the potential to tick an awful lot of boxes that are huge positives for the area.”
The library building - which opened in 1934 - is in a poor state of repair. The original concrete is crumbling in places, and although it is not unsafe, other factors such as the presence of asbestos mean it could take as much as £30million to bring up to modern standards.
The council views the Chinese plan as a way of fulfilling its ambition for a luxury hotel and creating the opportunity to move the city centre library service to a better home. The aim is also to free up public funds currently being spent on the building, while bringing in upwards of £1 million in business rates from the hotel - which could then be spent on frontline services.
Coun Bramall said the plan would ‘preserve and give the building a long-term use’, bringing a ‘substantial number of jobs’.
“It helps to plug a gap in the city’s offer,” he added.
“When big companies are looking at which city to locate in, they look at good transport, a nice environment, retail, and hotel accommodation that visitors to our businesses want.”
Jack Scott, cabinet member for community services and libraries, said the council would be ‘open and transparent’ about the future of the library service.
“I can give absolute assurances that no matter what the outcome, there will always be a city centre library in Sheffield. We will be using this 12-month period to scope out options for where we want to locate the service if the deal goes ahead, and are talking to people in Sheffield about what they would like to see.”
If the deal falls through, the library service would not move.
A public meeting about the Central Library will take place at the Town Hall, from 5.30pm on December 6.
The Graves Gallery was created following a bequest by philanthropist JG Graves.
Dona Womack, chairman of the JG Graves Charitable Trust, said she supported the scheme, adding: “This is a wonderful opportunity to breathe new life into this iconic building and we are pleased that early plans suggest that JG Graves’ legacy will remain publicly accessible and at the heart of the city for generations to come.”
A planning application for the West Bar development could be submitted as early as January. This would also be led by Sichuan Guodong, and would fit in with the council’s vision for the area, encompassing the existing Riverside Business District and West Bar Square, a proposed £175m mixed-use project from developer Urbo.
Coun Bramall said: “It’s our land but very much their plan.”