Wakefield Council bought the Wood Street Police Station site in September 2014 and it is currently being used by staff and volunteers from Wakefield Cathedral.
Council leader Peter Box said it was still working towards securing a deal to transform the building into a hotel and to help regenerate the area while preserving the heritage and architecture.
Coun Box said: “We continue to work with people who are interested in creating a hotel facility.
“The building is very important. It is at the heart of the Civic Quarter.
“All you have to do is walk down Wood Street to see that times are tough.”
The council also bought the Grade II-listed derelict former crown court building last year as part of its plan to change the face of Wood Street and bring more visitors into the city.
Coun Box said: “If we were to get a hotel facility we could bring the Crown Court building back into public use.
“We are very proud of the fact that we have got the Hepworth and Wakefield One which I think are really good public buildings.
“But it’s not just about attracting people with the new and glitzy side, there is an awful lot of heritage in our city as well. It’s all about making sure we have got a good mix of the old and the new.”
“The hotel would also give visitors the opportunity to stay in the city centre.”
The council has already made improvements made to the war memorial and County Hall and the new £31m library and museum, Wakefield One, on Burton Street, opened in 2012.