Mayor Pat Patterson says only 700 plots remain at the cemetery.
The Oxford Eagle reports that the city will hire someone to design a columbarium that would hold 600 to 800 niches.
A columbarium is a vault usually built out of cement or marble that holds urns containing cremated remains.
Patterson says St. Peter's Cemetery, also known as Oxford Memorial Cemetery, will likely run out of plots in five to seven years.
Patterson said he would like to see the vault built on the highest point of the cemetery.
Aldermen say the columbarium could be built in the shape of a "C'' to provide space for services.