Yeah, that's why I said a multitude of worlds, so that they could all live in the same sector. But something akin to the Citadel would be a good seat for the Council, minus the Reapers of course (although it could be a cool disaster). But I am against the Council having taxes from the members, and allowing the Council being able to build any ship of the members. It makes more sense for the Council to be leased a military by the members, and it also forces the council to have at least 10 members (each 10% max military), and therefore be truly a Galactic Council. The Council would not be a Holy Roman Emperor from EUIV, but a multi protectorate who grows stronger with the amount of members it holds. If powerful enough, the Council could start vassalizing other empires, effectively turning into the Galactic Republic of Star Wars. In that sense, the Council would pass through certain "stages":
The foundation stage, where the first ten (or more) empires agree to the formation of a Galactic Council and a sector in space is colonized by a new nation known as "The Galactic Council". The population of the habitable planets of the area in space (has to be centralised in the galaxy as well) are composed of the species in the founder empires, all the species, even those you have as slaves. All the non member empires and unknown empires get an event stating something like "A communication was intercepted from one of our stations, it is in an unknown language" and the empire gets a new short research program. Once they have translated it, it would reveal the message proclaims the fundation of a galactic council and cetera, asking the non-members to congregate to the center of the galaxy. A Citadel ship also begins building, where it follows a sort of Civ world fair system, with member empires getting a new building option called "The Intra-Species Capital", which is technically infinite, and uses a certain amount of resources per day. All the member empires can participate, and the more production is directed towards its construction, the quicker it is built. The more resources a single empire has spent in its construction, the more favorable the Council will be to that empire. Once it is build, a gas giant-sized "ship" appears in orbit in the most centralized system in the galaxy and acts like a huge planet, called something like "The Council". The ten founding empires are granted a permanent seat in galactic desicions, and five other temporary seats exist that are granted in rotation to other member empires.
The High Species Council stage, which triggers once more than 50% of the empires have joined the Council. At this point, it becomes a sort of Mass Effect Council, with the president being from one of the Council Worlds/Capital, while the five strongest empires (calculating military power, population, territory size, tech level, diplomatic influence, and so on) are granted a "high" seat, while the other members are granted a minor seat. The "High Empire" have a lot of autonomy and can defy Council desicions, while the minor seats must comply or face trade restrictions and unrest (for example, the Council will ask the abolition of slavery, and while the High Empires can ignore the edict, the minor empires might face a huge slave revolt). Every decade, the High Empires can be switched out if a stronger empire is a member of the Council. The Council can also form its own ground armies, with a very high percentage of Spec Ops troops, that will assist sieged planets of any member empire, as well as small ships (max frigate size) to investigate that its edicts are properly implemented.
The Intra-Species Council stage, which triggers after 100 years or so after the previous stage, where the entire structure is reworked. For 1 to 5 years, the Council has a chance to become embroiled in Civil Galactic War. At the end of the unstable period, the Council emerges as a Star Wars kind of Council, with each different species having its own seat on the Council, with each species having the same voting power. Of course, the dominant species in the strongest empire has a lot more implicit authority in the Council, but the president of the council is still from the Council worlds, and it will remain so for until the destruction of the Council. That period will last very long, and has a high chance of increasing tensions and having Galactic Civil Wars happen. The Council can at this point develop its own military presence instead of relying on other empires' ships.
The Council can use the Civil Wars to expand its direct territories, but those have a higher chance of forming seperatist groups, effectively plunging the whole galaxy into more Civil War. Any resolution passed in the last stage is galaxy wide obligatory to the empires. So the abolition of slavery will be passed, and any planet buster weapon or nuke (aka, Weapons of Mass Destruction "WMDs") can be abolished. If a planet buster weapon is found being manufactured or operational, even not scrapped, the Galaxy falls into a Civil War, with sides forming on defying Council authority or abiding to it. The more powerful teh Council gets, the more dangerous it will be to member empire's autonomy.
), and the voting seats limited to only a few seats (Lets say 1 seat for each 5 big empires, minimum of 3 maximum of 10 in case of mods), forcing you to play politics to actually get a seat and you would need to work on the behalf of the civs that voted to you or risk losing the seat in the next election. 
