A nine-block downtown revitalization project that Medford officials last year put on indefinite hold because of the recession appears to be emerging from its state of limbo.

A nine-block downtown revitalization project that Medford officials last year put on indefinite hold because of the recession appears to be emerging from its state of limbo.

The city, the Medford Urban Renewal Agency and Medford-based automotive retailer Lithia Motors announced Thursday they are in negotiations over a new development agreement to set a schedule for construction and funding — and the possible scaling down — of "The Commons" project to suit the current economy.

The existing development agreement signed in September 2006 by all three parties will be scrapped, and a new one inked.

"The project is alive, and we are moving forward with the full intent of all parties," said Jackie Rodgers, executive director of the Medford Urban Renewal Agency.

Many of The Commons' major design features will remain in place, including a three-block city park, officials said.

"It's still a good project," said Bill Hoke, Medford deputy city manager and economic development coordinator.

Mark DeBoer, Lithia vice president of real estate, said plans for a 10-story office tower for Lithia's headquarters likely would have to be downsized.

DeBoer said the lease on Lithia's headquarters, which are spread out in buildings from Jackson to Sixth Street, will expire at the end of 2012. The corporation hopes to move into the new headquarters in The Commons by that time.

"We all want to be in one place and not fragmented in different buildings," said Sid DeBoer, Lithia's chief executive officer. "It's just how and when. Everyone wants to see it happen."

The sagging economy and the resulting blow to the auto industry stalled the development. Construction originally had been slated to begin in 2008.

"We are back and making money, so we can look at this (project) again," Sid DeBoer said.

The existing development agreement calls for the office tower, the park, residential buildings, retail stores and a parking garage roughly bounded by Jackson Street, Riverside Avenue, Sixth Street and Central Avenue. Past estimates of the cost of the project have been about $100 million.

Lithia and city officials wouldn't release any other details about possible changes to the plan, citing pending negotiations. A draft development agreement is expected to be presented to Medford City Council in about a month.

Some work on The Commons was completed before the project was put on hold last August, including the replacement of century-old water lines and construction of a Greyhound bus station on Front Street. Greyhound vacated its locations on Bartlett Street and Fourth Street to make way for the redevelopment.

Reach reporter Paris Achen at 541-776-4459 or pachen@mailtribune.com.