The arcade, which opened in 1985, has more than 70 shops and restaurants
Cheltenham Borough Council is set to sell its stake in the town's Regent Arcade shopping centre.
The authority has been in negotiations with the arcade's other investor, Canada Life, for the past six months.
The centre brings in an annual income of £700,000 from car parking charges and £500,000 rental income from shops.
Councillor John Rawson said the authority could make its investment "work much harder" and release money for the town's Civic Pride project.
"This is a win-win situation for Cheltenham," he said.
"Canada Life will inject a large amount of capital into the local economy by buying the council's share of the arcade.
"At the same time, the sale will release a large amount of capital which the council can use to support the revenue budget and help pay for long-overdue improvements to the town."
He said it was important to emphasise that the deal would not just be a "quick fix" for the council's budget, though it should help to substantially reduce the budget gap.
The arcade, which opened in 1985, has more than 70 shops and restaurants.
The Civic Pride project aims to rejuvenate Cheltenham's streets and public spaces, which could include closing Boots Corner and Royal Well to traffic and relocating the council offices to Portland Place.
The proposal to sell the council's stake in the centre will go before the Cabinet next Tuesday.