Having just approved a $5.7-million incentive to turn the SunTrust tower into a ritzy hotel downtown, the City Council is thinking about $1 million to turn a vacant lot into a mixed-use “University Marketplace” at South Square.

The incentive would be paid in seven annual installments conditioned upon Hawthorne Durham LLC getting the job done on time. According to the deal Economic Development Director Kevin Dick will present to the City Council on Thursday, “on time” means starting construction by July 2013 and getting a certificate of occupancy by July 2015.

It has been almost five years since Hawthorne Durham’s parent company, Hawthorne Companies of Charlotte, bought the half-empty Regency Plaza shopping center off Shannon Road and announced plans for a $75-million makeover. Hawthorne razed the old center, but the 15-acre tract has remained untouched since. Hawthorne did in the meantime buy and renovate the smaller Shannon Plaza center at Shannon and Old Chapel Hill Road, now called Hope Valley Plaza.

According to Dick’s memo to City Manager Tom Bonfield, the project cost is down to $64 million but plans still call for 365 apartments, with a restaurant and stores on their buildings’ ground floors, and two separate anchor stores, one of them a 20,000-square foot grocery. In all, University Marketplace would have 326,000 square feet of residences, 92,000 square feet of new retail, 15,200 square feet of renovated existing retail space and a 700-space parking deck.

Over the seven-year incentive period, Dick estimates that the city would get $1.4 million in tax revenue; in 2011, the company paid about $54,000 in city and county property taxes combined – about $380,000 if continued over seven years.

“The public commitment of $1,000,000 sends a strong message to potential investors that the City is invested in the deal,” Dick’s memo states. “Typically, public commitments drive investor confidence.”

The rest of the financing consists of Hawthorne’s own $16 million, a $43 million bank loan and $1 million from “other” sources, leading to creation of 370 new permanent jobs and 320 construction jobs of the sorts “likely to be ... entry level opportunities from which disconnected youth, ex-offenders and other hard to serve populations could benefit.”