EVERETT — City officials need more time to negotiate with a Seattle developer picked to build a 10-story hotel on vacant city land in downtown Everett.

In June, the city and Touchstone Corp. entered a 90-day negotiation period to work out a sale and development agreement for a sunken parking lot on the southeast corner of Colby Avenue and Wall Street.

This week, Councilman Arlan Hatloe introduced a proposal to extend negotiations for 30 additional days. The council voted 5-0 to approve the extra time for negotiations.

The proposal was not listed on the council’s agenda on Wednesday.

Council President Drew Nielsen and Councilwoman Brenda Stonecipher were absent.

The city of Everett’s property manager Mike Palacios said attorneys for the city and developer are confident that they are close to reaching an agreement.

The developer’s plan calls for 150 to 180 hotel rooms under the direction of a national chain with an indoor swimming pool, a restaurant and an underground parking garage.

The Holiday Inn on Pine Street has 243 rooms and Best Western Cascadia Inn on Pacific Avenue has 134 rooms.

Touchstone is offering to pay the city up to $2 million for the land, which sits two blocks west of Comcast Arena at Everett, a mile from I-5 and a short drive to Boeing’s assembly plant.

An appraisal last year pegged the value of the city’s lot at $1.25 million to $1.45 million.

Touchstone has completed several successful developments in the Puget Sound area, including a 150-room, three-story hotel in Kirkland and a six-story office-retail building in Seattle’s Belltown district.

By spring, it plans to open a 28-story office building in downtown Seattle’s Denny Triangle neighborhood.

Everett’s Office of Economic Development first pitched selling the city’s land in early 2007.

Officials hoped they could find a private developer to build a mixed-use development encompassing the Culmback Building at 3013 Colby Ave. and an adjoining parking lot.

But the project was scaled down and the city was forced back to the drawing board when the market wouldn’t bear out that vision.

Developers balked at the requirement to try to incorporate the 1920s brick building, which needs to undergo seismic retrofits and fire-code updates if it is to be preserved.

The latest idea for the hotel eliminates a requirement that the developer include the Culmback Building.

Skotdal Real Estate, the largest developer in downtown Everett, also submitted a proposal to purchase and build on the the site. The city rejected that proposal because it did not meet the city’s 10-story requirement.

Skotdal proposed a six-story, 95-unit residential building with street-level retail shops.

A second phase of development would see an office building rise above the Culmback Building, which would be incorporated into the new building.

Reporter David Chircop: 425-339-3429 or dchircop@heraldnet.com.