EVERETT — The vision was grand: Transform an old brick building and parking lot in downtown Everett into a high-rise hotel with a ground-floor restaurant and shops.

City officials hoped last year that they could find a private developer to pour millions into its vision for the Culmback Building and an adjoining parking lot at Colby Avenue and Wall Street.

But the market didn’t bear out that plan, sending city officials back to the drawing board.

Now, city officials are putting the property back on the market with the goal of building a smaller hotel. They’ve eliminated a requirement that the developer include the Culmback Building in the plans.

By scaling back on the plans, city officials say the land cost would drop from more than $3 million to between $1.25 million to $1.45 million.

“The big question of course is whether the economics are there to support a building of this magnitude,” said Mike Palacios, Everett’s real property manager.

The idea to find a private developer to take control of the site was first pitched in March 2007.

The city’s objective was to create an around-the-clock hub for pedestrians, to get a fair price for the land and to do all of this without spending public dollars.

It would have been a first of its kind for downtown, where most development in recent years has been directly driven through public investments — with a few notable exceptions.

But the city started over when developers balked at a requirement to buy, then tear down, the Culmback Building, which along with the parking lot was appraised in the range of $3.1 million to $3.2 million. As part of the original proposal, developers would have had to retain the facade of the historic Culmback Building.

The city also held back on pursuing development of the property for a period while the University of Washington was looking for a suitable place to build a branch campus.

The city still wants a developer to build an eight-story hotel or condo building at the site, but just on the parking lot. The Culmback Building would remain untouched.

An appraisal done in May of the parking lot alone pegs the value of the developable site in the range of $1.25 million to $1.45 million.

Even without the Culmback Building piece, the property could still accommodate a tall building.

The parking lot is 19,000 square feet. Several downtown buildings are already on smaller lot sizes. The 10-story Wall Street Building, which houses many offices for Everett’s municipal government, sits on a 10,000-square-foot lot.

Under the revised plan, the city will hold onto the Culmback Building, which is used by the police department and a small Everett law firm.

In the long term, the city still believes the intersection is ripe for a quality development.

With bay and mountain views, the site is two blocks west of the Everett Events Center, a mile from I-5, a short drive to Boeing’s Everett factory and a stone’s throw from major redevelopment projects on the riverfront and bay shore.

Any condos or apartments built on the site would also be eligible for a deep property-tax break offered by the city.

“It’s one of the most important intersections in our downtown core, and we want something lovely and activating,” said Lanie McMullin, executive director of Everett’s economic development department.

Rather than just auctioning the surplus land to the highest bidder, the city has decided to tailor the scope of the project and to carefully screen proposals in order to have more say in how the site is built.

This week, the Everett City Council voted for the second time in the last 10 months to accept redevelopment proposals for the empty lot.

The new proposal drops an absolute requirement that space for retail shops or a restaurant be included on the ground floor.

It also extends the window for which construction would have to begin on the site to three years.

Previously the city required a developer to begin construction two years after the sale of the land.

That extra time could bode well for developers, who are now facing tightening credit markets.

“It could be four years before a building comes out of the ground,” McMullin said. “Smart developers are looking ahead so that they can enter the market at just the right time.”

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