ESCONDIDO -- The city and Westfield North County are close to agreement on a new lease for the land beneath the shopping center, and the two sides are working together to figure out what to do with two department stores that will soon be empty at the mall, city officials said Friday.

Representatives for the city of Escondido and Westfield began talking more than a year ago, when the Los Angeles-based company asked to renegotiate its 55-year lease for the city-owned land that the shopping center rests on at Interstate 15 and Via Rancho Parkway. Westfield wanted to renegotiate the lease, signed in 1984, before launching a multimillion-dollar renovation of the regional shopping center.

Mayor Lori Pfeiler predicted Friday that lease discussions would wrap up soon.

"It's supposed to be pretty close," she said. "In the next month or so, our negotiations should be final."

The talks took on an added dimension last July, when Federated Department Stores announced its plans to merge with its competitor and consolidate its Robinsons-May stores under the name Macy's. That meant closing Robinsons-May stores in competitive markets with Macy's, including two at the Escondido center.

Those two are among five department stores that anchor the center, and the news that the Robinsons-Mays would close immediately raised concerns about the mall's viability. Department stores remaining at the center are Sears, Nordstrom, J.C. Penney and Macy's.

Pfeiler and Councilman Sam Abed said in phone interviews Friday that, while the city has an interest in making sure the spaces get filled, Westfield will make the final decision on what happens with them. Pfeiler said the city has given the company a list of desired stores, including such trendy, upscale retailers as Pottery Barn and Crate & Barrel, and that Westfield was "receptive" to the suggestions.

Both sides believe that finding the right tenant or use for the spaces is more important than filling them quickly, she and Abed said.

"My position is, we cannot compromise the integrity and long-term viability of the mall," Abed said. "That's why we have to be very patient in finding a major anchor that will maintain the success of the mall. It's a regional shopping center. And I think we have to be careful that we get what we want."

Westfield North County's general manager, Ryan Perry, said the Robinsons-May stores are scheduled to start holding going out of business sales at the end of the month. He referred questions about their fate after they close to Westfield spokeswoman Catharine Dickey, who did not respond to telephone messages left for her Friday afternoon.

Opened in 1986, the shopping center is considered to be a major asset for this largely working-class city of about 160,000 people. Originally named North County Fair, Westfield North County sits on 75.5 acres of city land and offers 1.3 million square feet of shopping space.

Westfield America Inc. bought the center from Toronto-based TrizecHahn Corp. in 1998. The purchase was part of a $1.44 billion deal that put 12 other shopping centers around the country -- including Plaza Camino Real in Carlsbad -- in Westfield's hands.

Under the current lease, the company pays Escondido $698,000 a year, as well as a percentage of the shopping center's revenue based on a tiered formula.

Westfield's Web site says the center currently houses 174 stores and 17 restaurants, including those in the center's food court and several freestanding buildings in the mall's parking lot.

Last year, Westfield submitted plans to the city that indicated the company's plans to add two family restaurants along the center's perimeter and replace three vacant stores at the north end of the center with more parking spaces. The new restaurants -- an On the Border Mexican Grill and Cantina and a P.F. Changs -- have worked their way through the city's permitting process and are expected to break ground soon.

On the Border will go in next to Romano's Macaroni Grill on the west side of the mall's entrance, while P.F. Changs will be on the east side of the entrance.

Those projects are moving forward separately from the proposed expansion for the center, said Pfeiler, who revealed the renovation plan early last year in her annual State of the City address. She said Friday that company representatives have said Westfield plans to spend $70 million to $80 million on the project, but wants an extended lease before investing more money in the property.

The city has its own financial stake in Westfield North County because it consistently is one of Escondido's top generators of sales tax revenue. In 2004, the shopping center sent $3.5 million into Escondido's coffers, a figure topped only by the Escondido Auto Park, with $3.8 million.

Pfeiler and Abed said that Westfield representatives have shared a number of ideas for the expansion with city officials, including ways to use the spaces that Robinsons-May will vacate. Maintaining a diverse collection of stores and adding ones that will complement existing retail outlets in the mall are priorities for all involved in the talks, they said.

"The challenge is that with all of the consolidation (in the retail industry), there are not many stores to fill that space," Pfeiler said. "But (Westfield representatives are) very creative and they've been coming up with some good ideas."

She and Abed declined to say more, citing the closed-door nature of the discussions. However, both said the city is eager to see Westfield North County continue to be successful.

Councilman Ed Gallo agreed that finding the right mix of businesses for the shopping center is important.

"Yeah, we do have an economic interest in the shopping center," he said. "And of course, we're going to take a good, hard look at it and make sure that we take care of the city's business."

Contact staff writer Andrea Moss at (760) 739-6654 or amoss@nctimes.com. To comment, go to nctimes.com.