Toad’s Place is in serious negotiations to open a second concert venue at the Palace Theater on College Street, the club’s attorney said Thursday.

The Palace would enable Toad’s to hold larger concerts and would complement the club’s current location, attorney Jim Segaloff said. He denied rumors that Toad’s — which faces a 90-day liquor license suspension this summer — ight move temporarily to the Palace Theater as a way to circumvent its suspension or relocate there permanently from its location at 300 York St.

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“Anything involving the Palace is not perceived as a temporary stopgap measure while Toad’s stays closed,” Segaloff said. “It would certainly be … an opportunity to have a large venue available on a regular basis.”

The Palace, which has been vacant for the past seven years, has a capacity of about 2,000 and would be ideal for larger concerts that Toad’s currently cannot host, he said. Toad’s owner Brian Phelps is in negotiations with David Nyberg, the developer whose company owns the Palace, Segaloff said. Phelps could not be reached for comment Thursday night, and officials at Nyberg’s firm, College Street, LLC, did not return messages this week.

The New Haven Register, citing anonymous sources, reported Wednesday that Toad’s will move into the Palace — either temporarily or permanently — when its 90-day shutdown begins on May 6. Segaloff called the report “absurd” and said that while Phelps wants the opportunity to stay involved in the entertainment business during the shutdown, negotiations with Palace were not driven by the suspension and there is nothing close to a timeline regarding the Palace site.

“It just is not even a thought or a discussion,” Segaloff said, referring to the suggestion that Toad’s might permanently shutter its York Street site and relocate.

This week, employees at businesses along College Street said they recently heard rumors that Toad’s was looking at the Palace, and they have observed construction at the site for the past few months. The construction has been the work of Nyberg’s company, Segaloff said, because there is no final agreement with Toad’s. But the construction shows that Nyberg clearly anticipates re-opening the Palace, the attorney said.

Toad’s would be well-off with a second, larger venue that could accommodate popular acts, Town Green Special Services District Executive Director Scott Healy ’97 said on Wednesday. The combination of an intimate venue and a larger concert hall, both managed and booked by the same company, has proven successful in other cities, he said.

A revitalized Palace operating under the Toad’s umbrella would also be a boon to area businesses, many of which already stay open late to cater to patrons coming from the bars and clubs in the downtown area. In the immediate vicinity of the Palace — located between Chapel and Crown streets about a half block from Old Campus — are the Shubert Theater, Criterion Cinemas and the busy Crown Street entertainment district.

“Having the lights back on at the Palace … nothing could be better for College Street,” Healy said. “The foot traffic that a regular concert venue generates, you can’t replicate that.”

In a deal reached with the Connecticut Liquor Control Commission in November, Toad’s agreed to a 90-day suspension and a $90,000 fine as a result of a 2005 police raid that found 87 underage patrons in possession of alcohol at the club. At the time of the agreement, Phelps estimated the suspension would cost Toad’s about $200,000 in fines and lost profits.