In yet another blow to Escondido's economy, Westfield Corporation has abandoned plans to spend $200 million transforming North County Fair into the largest regional mall in the county.

The decision, which Westfield officials blamed on the recession, comes as city sales tax revenue is already spiraling downward because of reduced consumer spending and the closures of Mervyn's, Circuit City and several auto dealers.

Westfield officials said this week that they still want to make some less ambitious upgrades to the 23-year-old mall if city officials agree to extend the company's lease by 12 years, making it due to expire in 2047 instead of 2035.

But city officials said the proposed changes, which would not increase the mall's square footage beyond its current 1.2 million, might not be significant enough to warrant a lease extension.

"We want to be flexible with them, but we also need a good return," City Councilman Dick Daniels said. "They're reconfiguring, not expanding, and it doesn't seem that's enough to warrant an extra 12 years."

But Councilman Sam Abed said it is crucial for the city to allow the proposed renovations because they would keep the mall vibrant and encourage customers to rediscover it.

"We were hoping they would go for the full upgrade, but we have to welcome any substantial investment in Escondido," Abed said. "We can work out the lease."

It was unclear whether Westfield had also abandoned plans to upgrade its Plaza Camino Real mall in Carlsbad. The company has always made renovations at the Carlsbad site a lower priority than at Escondido, and no formal plans to upgrade the Carlsbad site have ever been submitted.

But Westfield and Carlsbad officials agreed last month that a special planning document would be drafted to guide renovations at that mall.

Back in Escondido, Westfield officials said the less-ambitious upgrades would include chopping up the vacant Robinson's-May stores into smaller parcels, erecting another free-standing restaurant in the parking lot, and diversifying the tenant base by adding food stores such as Trader Joe's.

"We're trying to get away from our commoditized model and create more convenience for customers," said Jonathan Bradhurst, a Westfield senior vice president who works in downtown San Diego.

Bradhurst said the renovations would cost less than $100 million, but he declined to be more specific. The $200 million upgrade, which would have included erecting several parking garages, also would have increased the retail square footage by 450,000.

Bradhurst said the less-ambitious plans would include redecorating and modernizing the mall so customers would find it more visually appealing.

"We hope to make substantial experiential changes," he said.

Even without the proposed upgrades, some significant changes are under way at the mall, city officials said.

The former site of Oggi's Pizza will become the second location of East Village Tavern & Bowl, a trendy sports bar near downtown San Diego's Gaslamp District.

BJ's Restaurant and Brewhouse, a popular Orange County pub that has been compared with Dave & Buster's, will occupy a new free-standing restaurant to be built southwest of Romano's Macaroni Grill.

And H&M, a Swedish clothier, will take over part of an empty Robinson's-May site.

The new businesses could help stem a sharp downward trend in the revenue the city receives from the mall, which sits on 86 acres at the south end of Kit Carson Park near Via Rancho Parkway.

Escondido received more than $4.8 million in combined lease and sales tax revenue from the mall during calendar year 2007, but a rash of vacancies and sluggish sales lowered that total to about $4.1 million in calendar year 2008 ---- a 15 percent drop.

Sales taxes, which pay for about 40 percent of the city's budget, have dropped from $30 million to $25 million in less than three years. And the biggest sales tax producers in Escondido are the auto dealers and the Westfield mall.

Call staff writer David Garrick at 760-740-5468.