SAN RAMON -- Ground may finally be broken for the long-awaited City Center project next year under a new deal reached between city officials and Bishop Ranch builder and operator Sunset Development.

City Manager Greg Rogers said the latest agreement for phase one of the downtown complex will go to the council for approval Oct. 8. If approved, it will give the city a new two-story, 45,000-square-foot City Hall and renovated library without going into debt.

It will also ensure any sales taxes from the envisioned future City Center entertainment and retail complex would fund city services rather than pay off construction debt previously contemplated in a 2007 deal.

A downtown has been talked about since the city was incorporated in 1983. The city reached a deal in 2007 for Sunset to build a 40-acre downtown on mostly Sunset-owned property near the intersection of Camino Ramon and Bollinger Canyon Road. The city issued the necessary project approvals, but Sunset's plans stalled when the economy tanked, Sunset CEO Alex Mehran told the city in 2011.

Mehran will provide an update on plans for the remaining project phases at the City Council meeting, which at one time was to include a movie theater, shops, restaurants, offices, a hotel and condos at a cost of nearly $1 billion.

In the current proposal, Sunset will design and construct a new City Hall on Bollinger Canyon Road in the southwest corner of San Ramon Central Park where basketball courts are currently located. The company will also exercise a more than decade-old option to buy 11 acres of city-owned land adjacent to the park for $7.5 million. That money, coupled with $7.3 million Sunset owes the city for a previous land purchase, will cover the estimated $13.4 million City Hall, and leave an extra $1.4 million to expand and renovate the San Ramon Library across the street, Rogers said.

Scrapped in the new deal were previous plans for the city to buy a three-acre parcel of land from Sunset on the south side of Bollinger and Camino Ramon for an 110,000-square-foot City Hall, and a plan for the city and Sunset to enter into a tax-sharing agreement for the rest of the City Center property.

Mayor Bill Clarkson called the deal up for approval a win-win.

"This is a construction and financial agreement," Clarkson said. "It doesn't place any debt on the residents of San Ramon."

Rogers said the plans for a scaled back City Hall on city-owned property show the city's prudence, and will still be an upgrade from the current 18,480-square-foot City Hall, built in 1982. The new agreement could also be a sign of more to come, he said.

"This is happening because I think the rest of it is cuing up to happen, but a lot of it depends on the ability of Sunset to attract tenants," Rogers said.

The City Council meeting will be at 7 p.m. Tuesday, Oct. 8 at City Hall, 2226 Camino Ramon.

Ashly McGlone covers San Ramon. Contact her at 510-293-2463. Follow her at Twitter.com/AshlyReports.