The threat of a lawsuit is continuing to keep Seattle from redeveloping a vacant downtown block as Civic Square, Mayor Ed Murray said Thursday.

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Seattle Mayor Ed Murray revealed Thursday why the city’s long-delayed plan to redevelop a vacant downtown block is still going nowhere: the threat of a lawsuit.

For about a decade, the plan has called for Seattle to sell most of the property just west of City Hall to a developer in exchange for the company building a $25 million Civic Square plaza on part of the site, alongside a high-rise residential and office tower.

The land, between Cherry and James streets and Third and Fourth avenues, has remained a hole in the ground because the developer under contract with the city since 2007 has been unable to line up financing and close on the sale.

Progress finally looked likely in October, when Murray vowed to cut ties with Triad Development over the company’s questionable involvement in a City Council race.

“These recent actions by the developer are troubling to say the least. I expect more from the city of Seattle’s business partners and I have no desire to develop this property with Triad,” he said at the time.

“The people of Seattle will be better served if this current agreement lapses, and we move forward with partners who represent the values of the city of Seattle.”

The mayor has been unable to follow through, however, even though Triad’s contract expired in December. Rather than start over in January, Murray gave the company extra time to attempt to transfer its project rights to another developer.

Officials said a transfer would be better for Seattle than a reboot because it would allow the property to be redeveloped sooner, during a boom time for the city’s economy.

And in March, it appeared Triad had found a willing partner. But a proposed transfer to local developer Touchstone collapsed in May, leaving the hole — at the site of Seattle’s Public Safety Building until its 2005 demolition — as empty as ever.

On Thursday, asked about interest in the site, Murray confessed the city has been unable to end its relationship with Triad for legal reasons.

“The challenge here is there have been a lot of individuals who’ve expressed interest in the Civic Square block,” the mayor told reporters. “Chinese investors, other investors. And what I’ve said to them is, I can’t engage in those discussions, given that I’ve inherited an agreement that is still in place. Otherwise, the city would be sued.”

The city is working to identify expert real-estate attorneys who can help Seattle extract itself from the relationship with Triad, Murray said, noting the contract was initially put together by his predecessor’s predecessor in office, Greg Nickels.

“We’re working under an agreement designed a long time ago,” Murray said. “I can’t just stop it. The city would be sued and the city would probably end up being liable for a significant amount of money. We’re working through the appropriate processes to how we move forward … so that we can entertain other ideas about how an entire block in one of the hottest real-estate markets in the country can be utilized. But I simply cannot cut it off. I would expose this city to millions of dollars in potential liability.”

Murray didn’t explain exactly what legal hold Triad may have over the city, and a spokeswoman for Seattle Finance and Administrative Services, the city department overseeing the Civic Square plan, declined Thursday to flesh out his remarks.

Triad CEO Fred Grimm didn’t immediately respond to a request for comment.