ESCONDIDO -- Aiming to spur more upscale development in the heart of downtown, city officials said this week they may buy the vacant H. Johnson furniture store site to make way for a high-rise housing project that would feature ground-floor retail and underground public parking.

Such a project would have to wait until the housing market recovers, so the city's short-term plan for the site calls for a large municipal parking lot, said Mayor Lori Holt Pfeiler. The site is bordered by Broadway, Second Avenue and Maple Street, and it is only a few steps from the Grand Avenue business district.

Councilman Ed Gallo said the city has been trying to buy the site since H. Johnson furniture closed last summer. Gallo said a deal became more likely this spring when the owner, Dennis Roach of Los Angeles, lowered his asking price to about $4.7 million.

"He had been asking for an off-the-wall amount," said Gallo, a real estate agent. "But now that it's been vacant for a year, it's a bit of a different story."

Even if city officials are not able to find a developer to build the housing project, it is important for the city to gain control of the strategically located parcel, said Pfeiler.

"It's in the middle of our downtown, so we care very much what happens to that site," she said. "The fear is what might happen if we really had to provide more parking for downtown at some point. We have struggled to find and buy property there."

But Councilwoman Marie Waldron said the city should move forward cautiously on the purchase.

"It's a nice site, but there are other similar places in the area," said Waldron, whose family owns a T-shirt shop one block to the east. "To me, the big thing is making sure we spend our money wisely."

Assistant City Manager Charlie Grimm said the city would probably buy the site on credit instead of paying the entire purchase price upfront. The city is in the midst of a budget crisis created primarily by a sharp reduction in sales tax revenue.

Grimm said the city will soon have the site appraised to see if the asking price is appropriate. The city is also seeking confirmation from the county that soil under a small portion of the site is no longer contaminated by toxic dry cleaning fluids.

A dry cleaner operated on part of the site during the H. Johnson era, which spanned from 1975 until last summer, said Grimm. Before that, the site was a Sears, Roebuck and Co. from 1950 to 1974. The store was boarded up from 1972 to 1974.

According to city records, the site was an egg and poultry facility during the early part of the 20th century, and from 1933 to 1950, it was the Escondido Community Hospital, a precursor to Palomar Medical Center.

Tom Crowley, a downtown real estate agent hired by Roach to find tenants for the vacant site, said he has struggled to find the type of upscale clients that the city wants for Grand Avenue and nearby streets.

"We've been getting calls from low-end uses only," said Crowley, who declined to elaborate.

Crowley said a major hurdle has been that the 31,000-square-foot building would be difficult to divide up. The proposed rent, calculated at 80 cents per square foot, is about $24,000 per month, he said.

Crowley said he thinks it would be a smart move for the city to buy it.

"This is the only half-block site anywhere downtown," said Crowley. "It's terribly important."

Crowley said the site's Maple Street frontage should also make it more appealing, because another housing project is planned for Fourth Avenue and Maple and the city is planning a pedestrian plaza near Maple and Grand.

Contact staff writer David Garrick at (760) 740-5468 or dgarrick@nctimes.com.