CHICAGO-Fallow for more than a decade, a square block between venerable Marshall Field's flagship store here and City Hall will be the scene of construction next spring. A $12.3-million sale of the city-owned site to Arlington, VA-based Mills Corp. was recommended by the community development commission Tuesday, paving the way for the REIT's 417,000-sf, $336.2-million retail and entertainment complex that will be the centerpiece of 108 N. State St., formerly known as Block 37.

The six-story retail and entertainment center, which promises to bring local and international retailers and restaurateurs under its atrium and "green roof," is scheduled to open in 2007. The first phase of the Central Loop redevelopment also includes a new $172-million Chicago Transit Authority station, which involves connecting its Red and Blue lines to create an express route to O'Hare International Airport. Also in the short-term plans is a 17-story, 400,000-sf office tower at the corner of Dearborn and Washington streets, anchored on the first five floors by CBS affiliate Channel 2's studios in 100,000 sf.

Two other towers will likely come later. Preliminary plans call for 200 to 300 multifamily units at State and Randolph streets, with a 200- to 300-room hotel at Dearborn and Randolph streets. However, those plans are subject to change with market conditions, city and Mills Corp. officials emphasize.

Not only did the city buy back the site in 2002 from a development team that included Neil Bluhm for $32.5 million, the property was appraised at $37 million last month, according to department of planning and development deputy commissioner Terry Haymaker. However, she adds that appraisal is based on no restrictions on the land's development. The city's requirements include building a core shell for the new CTA station, renovations to an underground pedway, environmental remediation and building the project around an existing ComEd substation, Haymaker adds.

Mills Corp., whose market capitalization has doubled to more than $8 billion since the city decided to negotiate a master development agreement with the company, will pay $3.1 million at the closing of the land sale. A second payment of $4.5 million hinges on Mills Corp. negotiating a development agreement to build the office owner, most likely with Lincoln Property Co. A third payment of $4.7 million is tied to the residential and hotel component.