HERCULES -- Plans for a Safeway store near Hercules' busiest intersection have gotten a boost with the city's announcement that a deed restriction against selling groceries and an array of other products applies only to part of the site.

Sycamore Crossing, an 11.4-acre, bullet-shaped lot wedged between Sycamore and San Pablo avenues, consists of two parcels: 3.2 acres at the tip and 8.2 acres at the back, bounded by Tsushima Street.

The deed restriction, imposed by a previous owner, a grocery-store holding company, applies to the larger parcel. Unless lifted, the restriction would impede development of what City Manager Steve Duran characterized as a "traditional, one-story Safeway" store near Tsushima.

Plan B could be a more urban-type store with rooftop parking, similar to a Safeway in Burlingame, or a multilevel, podium-style Safeway like one under construction in Milbrae, Duran said.

Initial reaction on local blogs largely praised the Plan B possibility, in sharp contrast to when the city first announced in January that it had entered into a purchase-and-sale agreement with Property Development Centers LLC, an affiliate of Safeway, that did not include specifications about the configuration of the store. Some residents at the time accused Duran and some council members of a secret plot to suburbanize Central Hercules and betray the New Urbanist vision underlying it.

A store with the rooftop-parking style would be on the first level, off a smaller, ground-level parking lot, according Duran's Oct. 19 weekly report; a podium-style store would be on the second level, with street-level parking below.

Meanwhile, the city continues to negotiate to remove the deed restriction on the larger parcel, Duran said. A lawsuit by the city against American Stores Properties Inc. and a successor, Save Mart Supermarkets of Modesto, seeking to lift the restriction is headed to court-ordered mediation that is expected to be completed in late November, Duran said.

That the restriction applies only to the larger parcel is the legal opinion of both the city's and Safeway's counsels, according to Duran's report. Corporate officials at Save Mart, the current holder of the deed restriction, could not be reached Friday.

Safeway has proposed building a store of 55,000 to 65,000 square feet and a gas station with an unspecified number of pumps, as well as an unspecified "junior anchor" store, restaurants and smaller shops on the site, Duran said.

Some neighborhood residents say Sycamore Crossing should be planned in coordination with Sycamore North, a half-finished, four-story building that the city is turning over to a San Francisco developer to finish with up to 147 apartments and 12,777 square feet of shops and restaurants. Critics say they fear that without coordination, the two projects will produce a parking nightmare that will affect residents of the adjacent Bayside neighborhood.

Duran said Friday that the final store design will factor in slope and terrain and will be subject to the city's design review process.

Contact Tom Lochner at 510-262-2760. Follow him at twitter.com/tomlochner