Skeezix
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Old City Hall would be the most ideal location for an iconic Main Branch of Toronto Public Library. Unlike the NYPL Main Branch (despite it being built on a former reservoir), the TPL Main Branch would not be purpose-built though, which means that it would require much renovations to convert the space.
The city could accept donations and sell naming rights for various reading rooms to raise funds. Yes, it would replace the small branch at the current City Hall.
Donations and the sale of naming rights has almost never been able to fund cultural facilities in this city before (usually only covering a portion of the costs), so I strongly doubt it would cover most of the bills here. The annual operating costs would not even begin to be offset by the closure of the existing tiny City Hall branch. Absent bags of cash falling down on us from heaven (or, more practically, a municipal government taking a grown-up approach to taxation and infrastructure and public facilities - maybe the bags of cash from heaven are more realistic?), I don't see this happening unless we start to gut our neighbourhood based branch network. The network that is the key to TPL's success. And for what? Is having an "iconic" branch worth it? What would be achieving that we are not already? Would we get better results? How would we be achieving more with this main library than we would by continuing to build our branch system?
Everyone is taken by the romanticism of a flagship library in Old City Hall, including myself, but nobody seems to want to tackle these questions.
A regular branch in Old City Hall, perhaps larger than usual to reflect its central location, might be another matter. Maybe.