The City Council has agreed to negotiate exclusively with the Academy of Motion Picture Arts and Sciences to restore the former La Cienega water treatment plant.
The academy wants to house its Margaret Herrick Library and film archives at the historic building. An academy spokesman said the nonprofit group is willing to spend about $4 million to restore the waterworks.
The 60-year-old facility had been marked for demolition by the City Council last year, but a group of preservationists persuaded the council to order a study exploring possible uses for the Spanish Colonial-style building.
The study, released last week, concluded that the structure could be rehabilitated, and the academy surfaced as a potential tenant.