The Vancouver Art Gallery appears poised to take over much of a 1.8-acre downtown city block for a new $300-million to $350-million purpose-built gallery.

The Larwill Park site is opposite the Sandman Hotel on West Georgia Street and is bounded by Cambie, Dunsmuir, and Beatty streets.

In a 20-page report to council, city manager Penny Ballem has recommended that council authorize staff to negotiate a memorandum of understanding on a 99-year lease "at nominal gross rent".

Any deal would be conditional on the VAG securing funding agreements for $100 million from the federal government and $50 million from the provincial government before April 30, 2015.

In 2008, the B.C. government kicked in $50 million when Gordon Campbell was premier.

Council will vote on the recommendation on Tuesday (April 23), but already, Mayor Gregor Robertson has declared that he's in favour.

“We’ve done a lot of work to support the arts in recent years, but this has the potential to really elevate our creative economy to the next level," Robertson said in a statement issued tonight. "I hope that all of city council will support the recommendation.”

With the mayor's backing, it's hard to see how his Vision Vancouver majority on council wouldn't approve of the recommendation.

Vancouver artist Roy Arden was among those who publicly supported the VAG's effort to secure the Larwill Park site.

He told the Straight by phone that he was "impressed" by the city staff report, describing it as "very thorough".

"It's great news," he said. "I've always thought that it's a no-brainer."

He noted that PricewaterhouseCoopers's updated economic-impact study forecast that the new gallery would increase the gross domestic product by $299 million over the first five years of operation.

In addition, the accounting firm predicted that the federal government would generate $26.2 million in revenue—mostly from taxes—and the province could expect to receive $32 million over that five-year period.

"It's a win-win thing to build a new museum," Arden said. "It's one of the best investments a government can make."

Vancouver real-estate marketer and art collector Bob Rennie and demographer David Baxter, on the other hand, have predicted that the development of a new art gallery at 688 Cambie Street will undermine the cultural sector.

That's because they've said it would gobble up so much public money that there wouldn't be as much left over for other arts organizations.

"Fund raising for the arts will be particularly competitive, with capital campaigns underway for the City of West Vancouver's new museum, the City of North Vancouver's Presentation House and Emily Carr University all pitched at the same wallets as the VAG will be seeking to pry open," they wrote in a widely circulated document, "and all of these [will be] competing with the ongoing campaigns of other cultural, educational and health care facilities."

Rennie and Baxter also pegged the cost of the VAG's new gallery at $500 million after taking into account the value of the city-owned site opposite the Sandman Hotel.

They proposed a decentralized VAG with seven venues and 180,000 square feet of exhibition space.

Rennie and Baxter put the cost at $150 million, including $25 million to enhance the collection. They argued that by monetizing the Larwill Park site with a real-estate development, the city could generate a revenue stream to fund arts and culture.

City council has not supported their proposal, which was vehemently opposed by Arden and other high-profile visual artists.

The VAG is the custodian of the city's permanent art collection. According to the city report, this includes more than 10,000 works of art valued at around $300 million.

The purpose-built gallery at 688 Cambie Street would have 86,500 square feet of exhibition space, according to the report. This compares to 40,448 square feet of exhibition space in the Francis Rattenbury–designed old courthouse at 750 Hornby Street..

Retail space would more than double from 15,157 square feet in the existing facility to 37,300 square feet in the new building.

The purpose-built VAG would also include classrooms, studios, black-box space, artist archives, a 300-seat auditorium, and a resource and learning centre.

The VAG has said that it has already secured $40 million in funding.

Its 2012 business plan for the new gallery, which was prepared by Lord Cultural Resources, estimated the annual operating budget to be around $20 million in each of the first two years, excluding depreciation and amortization.

In year three, revenues are projected to rise to $22.6 million.

In 2008, PricewaterhouseCoopers was retained for an earlier economic-impact analysis, which suggested attendance of about 360,000 "in a stabilized year of operation".

Lord Cultural Resources estimated attendance in the opening year at 450,000 "because of the novelty factor and the media attention paid to a newly opened or reopened attraction, which causes area residents to be more likely to attend".