Kenmore is taking a fresh look at how to redevelop a key downtown property after the city and an affiliate of Los Angeles-based Urban Partners scrapped their languishing plans for a high-density retail and commercial project, Kenmore Village by the Lake.

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Kenmore is taking a fresh look at how to redevelop a key downtown property after the city and a private partner scrapped their languishing plans for a high-density retail and commercial project.

“Things are in flux, and we hope to have news within a couple of weeks,” Mayor David Baker said Monday about the future of the 9.6-acre site at the northwest corner of Northeast 181st Street and 68th Avenue Southeast.

The city and developer RECP/UP Kenmore, an affiliate of Los Angeles-based Urban Partners, announced Friday they had reached “a mutual and amicable decision” to scrap a development agreement under which RECP/UP was to build Kenmore Village by the Lake on city-owned land.

“They’ve had the property since 2007, I believe, and we feel that there’s potential in that property, and we were getting anxious to get it developed and opportunities have presented themselves,” Baker said.

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Neither Baker nor Assistant City Manager Nancy Ousley would say what opportunities the City Council would consider at a Monday night executive session. No immediate action was expected.

The city agreed to pay the developer $700,000 to terminate the agreement, Ousley said, much of that representing the return of earnest money and RECP/UP’s payments of $50,000 a year to keep the agreement alive.

RECP/UP had planned to build at least 300 residential units, 77,000 square feet of retail space and 23,000 square feet of space for public gatherings and events, and a mix of surface and structured parking.

But another development group created by Urban Partners defaulted on a loan in 2009 after building a similar project, Burien Town Square, and then finding itself unable to sell the 124 condominiums in a collapsing real-estate market.

ST Residential, which acquired the Burien project through foreclosure, began marketing the condos again last year after a two-year hiatus.

The Kenmore Village property is adjacent to several new public buildings: City Hall, a county library branch, a post office and a fire station. Two major tenants, Grocery Outlet and Ostroms Drug & Gifts, moved to other locations in Kenmore to make way for the redevelopment that has yet to take place.

“This is a good time for the city to take stock of where we want to go next,” Ousley said. “It’s a whole different economy than it was in 2007 when the original development agreement was signed. Definitely, the city has a real commitment to revitalizing downtown and building on some of the good things that are already happening in the downtown.”

Keith Ervin: 206-464-2105 or kervin@seattletimes.com

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