Grand visions to renovate the Palace of Fine Arts stalled yet again at Thursday’s Recreation and Park Commission meeting.

The “untold San Francisco and Bay Area story” that a local nonprofit was hoping to exhibit at a new museum in the space likely will remain just that — untold. The Museum at the Palace proposal failed in a 4-2 vote because of the group’s spotty fundraising plans.

The space would need about $20 million in seismic and preservation upgrades, and the nonprofit’s proposal would tack on an additional $70 million to that.

Public comment stretched more than an hour, with many people speaking in support of the proposal. But the commissioners concluded it wasn’t financially feasible.

“The crux of the issue was, how would you finance it?” commission President Mark Buell said after the meeting. “We like the use, but for a nonprofit to take on a massive space that needs millions of dollars of renovations is a heavy lift. It’s going to take us a while to figure out the right way to approach the palace.”

Hotels also bid to lease the space, but dropped out early in the process because of historic preservation restrictions. Those groups included the Maybeck Center at the Palace of Fine Arts, a partnership of developer TMG Partners and management company Flynn Properties; and the Palace of Fine Arts-San Francisco Arts, Crafts, Community and Hospitality from Equity Community Builders.

The space will continue to be leased by the Innovation Hangar, a nonprofit that uses it for educational programming, while the commission decides on a long-term use.

The museum group could still fill the space if funding is identified, but it seems unlikely that will happen.

“I think the palace could lend itself to being a museum or exhibit space,” Buell said. “But there has to be financial backing behind it.”

— Lizzie Johnson

Email: cityinsider@sfchronicle.com , ljohnson@sfchronicle.com Twitter: @sfcityinsider, @LizzieJohnsonnn