Sears has dropped plans to open a store in the proposed Sherman Plaza development after increased land costs prompted developers to ask the store for more money.

Sherman Plaza developers unveiled final plans for the 250,000-foot retail shopping center at Wednesday’s Evanston City Council meeting.

The $100 million project includes a parking garage, shopping center and retirement home. But it no longer includes a Sears store to anchor the development and attract shoppers to the area.

Instead, developers replaced the massive department store with several smaller stores and said they are making plans to bring a fitness center into the development.

The plaza project, which encompasses the Sherman Avenue block between Church and Davis streets, will comprise four buildings. In addition to the parking garage and retirement tower, two buildings will be devoted primarily to shops.

Developer James Klutznick of Thomas J. Klutznick Corp. said the project will provide a “critical mass” of shops, entertainment and restaurants.

“(Sherman Plaza) makes downtown a regional destination,” he said. “If this project succeeds, it will have a beneficial effect on the entire downtown area.”

Klutznick said construction crews hope to begin the initial phases of the project by July and open the garage by November 2002.

The retirement home, the last slated for construction, is scheduled to be finished in the fall of 2003.

When developers gained the council’s initial approval of the project in October, the council had planned to pay a $2 million subsidy to Sears to open an Evanston store.

But developers dropped negotiations with Sears when costs of acquiring land drove rent prices too high for the department store.

The owner of Olive Mountain, 814 Church St., resisted developers’ attempts to make him sell the restaurant.

After beginning condemnation procedures on the property, city administrators settled with the owner for about $1 million.

The last holdout, Stuart Handler, settled with the city earlier this month.

Klutznick said the city likely will not have to contribute $2 million to the project, but he said developers might ask for money if they need it.

Although the Sears store would have attracted shoppers to the plaza, the smaller stores will bring higher rents for the city, said Martin Stern, executive vice president of U.S. Equities Reality, Inc., who helped negotiate the deal.

“Sears would have been a very good addition to downtown because of their marketing power and advertising,” he said. “But the variety of stores will improve downtown, too. In the end, it’s going to be a stronger deal for the city.”

Even without the Sears department store, Mayor Lorraine Morton called the proposal a “win-win” deal for Evanston.

When completed, the development will bring in additional sales tax and revenue, she said. She added that the development might also lure residents to other stores in downtown Evanston.

“It’s a wonderful proposal,” Morton said. “I just hope that we can get going with the project as soon as possible.”

Klutznick said the newly opened Century Theatres will help draw shoppers to the plaza as well.

“Evanston’s got it,” he said. “You’ve made the right choice. And it’s drawing from all up and down the lakefront.”