A full-service downtown grocery store — complete with a pharmacy and a Mongolian grill — is now closer to becoming a reality than ever before. But a Douglas County court case could still deal the project a major blow.

As expected, Queen’s Price Chopper of Kansas City has signed a letter of intent to locate a Price Chopper grocery store at Seventh and New Hampshire streets, on the site of the former Borders bookstore.

A development group led by Lawrence businessmen Mike Treanor and Doug Compton have filed plans at City Hall to tear down the old Borders bookstore and replace it with a three-story building that would include the ground-floor grocery store and two levels of apartments above. The filing of formal plans — an incentive request also will be filed — marks the largest step yet in a multiyear effort to bring a grocery store to downtown. But the project is still in jeopardy of receiving a major setback from a Douglas County lawsuit.

As we reported in December, a pair of condo owners in the adjacent Hobbs Taylor Loft building have filed a lawsuit alleging that the development group is seeking to do an end run around a set of covenants that prohibit a large grocery store from being built on the Borders property. The development group disagrees. The development group filed a motion to dismiss the lawsuit. A hearing was held at the end of March, and now the parties await a decision from Douglas County District Court Judge Kay Huff. If the lawsuit isn’t dismissed, it is presumed Huff will issue an injunction that will stop work on the project. That makes the stakes of her decision high.

“If there is a ruling that says we are under an injunction, it probably will be close to a death knell,” said Bill Fleming, an attorney who represents the development group.

This drawing shows a northwest perspective of a proposed grocery store and apartment building at 700 New Hampshire St.

The injunction wouldn’t stop the development group and the two residents — Brian Russell and Brent Flanders — from settling the lawsuit, but it is unclear to me whether such a settlement is likely. As for the timing of the court’s decision, that is anyone’s guess, although it has moved fairly quickly thus far by judicial standards.

Absent the lawsuit, excitement levels are high for the project. The development will need to win several city approvals, and the developers are making no secret about the fact that they will be asking for incentives. Those will include a tax increment finance district that will rebate back large portions of property and sales taxes to the project, plus a low or no-interest loan that will help equip the new store.

But developers say the community will be getting what it long has asked for: a downtown grocery store that is big enough to serve not just the downtown but surrounding neighborhoods like North and East Lawrence.

“There will not be anything lacking from the grocery side,” said Dennis Reilly, chief financial officer for Queen’s Price Chopper. “It will be one-stop shopping.”

This drawing shows a south perspective of a proposed grocery store and apartment building at 700 New Hampshire St.

Here’s a look at some the of the details from the latest plans:

• The approximately 20,000 square-foot Borders building would be demolished and would be replaced with a three-story building that would have a footprint of about 40,000 square feet. The ground floor would house the grocery store.The second and third floors would house 82 apartments that would include a mix of studio, one-bedroom and two-bedroom units. Fifteen percent of the apartments would rent at rates that meet the city’s new affordability standards.

• The project would include a two-level, underground parking garage built beneath the new building. The garage would have 182 spaces. The lowest level of the garage would be gated and reserved for the use of apartment tenants. The other level — about 91 spaces — would be available for grocery store customers. In addition, the project would have about 80 above-ground parking spaces around the store. About 60 of them would be in the existing lot just south of the current building. About 15 angled parking stalls would be added on New Hampshire Street and about five angled stalls would be added on Seventh Street. All the above ground parking is anticipated to be public parking that would be managed by the city, which means it could be metered spaces or could be two-hour free parking.

• In case you are wondering how you get your grocery cart to your car in the below-ground parking garage, the store’s design includes an escalator specifically built for grocery carts. The store would have a standard escalator, and next to it is one that is designed to grasp a grocery cart.

“You can stay with your cart, but you can’t ride in the cart,” Fleming said. “At least I don’t think you can.” (We’ll see about that.)

• The store will have many of the same features as the Queen’s Price Chopper at 151st and Metcalf in Overland Park, Reilly said. That store is twice as large — at 80,000 square feet — but the Lawrence store will be designed in a way to accommodate the same basic features. At 40,000 square feet, the Lawrence Price Chopper will be similar in size to the Dillons store on Massachusetts Street.

This drawing shows a west perspective of a proposed grocery store and apartment building at 700 New Hampshire St.

• Among the features the store will have is a drive-thru pharmacy. The drive-thru will be on the south side of the building. The store also will have a sushi bar, a Mongolian-style Asian grill, an American grill, cold sandwiches, a coffee shop, a large indoor dining area and a patio seating area. The store also will have a floral shop, a bakery, a full meat counter and all the grocery items you would expect. Reilly said the store’s produce department is being given special attention. The store will be designed so that the produce department is visible from the street.

“Produce is a real emphasis for us,” Reilly said.

• The project will need to win multiple approvals from City Hall in order to move forward.

“The project is going to need some help,” Fleming said.

The project will have to go through the historic resources review process, since downtown is part of a historic district. The Borders building only dates back to the 1990s, but the site includes an old wall from a livery station that used to occupy the site long ago. Keeping that wall was part of a compromise reached with historic preservationists who objected to the construction of the Borders building in the 1990s.

• City Hall approval of an incentives package will be critical, Fleming said. He said the project will ask for tax increment financing, which is a mechanism that allows the development to receive a rebate on new property and sales taxes generated by the development. Fleming said the TIF is needed to help pay for an estimated $7 million worth of expenses that will be incurred to build the underground parking garage. Fleming, though, said the project is not currently expected to ask for a transportation development district tax. That’s significant because a TDD would impose a special 1 percent sales tax on the grocery store.

“We want to keep the groceries as affordable as possible,” Fleming said. “There already is a concern about how regressive sales taxes are on groceries, so we want to avoid that special tax.”

The project also is expected to ask for about a $2.25 million no-interest or low-interest loan that would be used to equip the grocery store with items such as freezers, shelving and other items needed to make the store functional. The loan would be repaid to the city as long as the grocery store hit certain sales targets.

This drawing shows a northeast perspective of a proposed grocery store and apartment building at 700 New Hampshire St.

• A key piece of federal assistance also will be needed. The project will apply for federal new market tax credits. Those tax credits will be used to help finance the project, which is expected to have a total private price tag of more than $20 million.

Those tax credits are awarded through a competitive process. If the project were not awarded the tax credits, Fleming said the project would be in jeopardy. The development group should know in about a month whether it has won any tax credits this year. Fleming believes the project stands a good chance of winning tax credits.

“I think the odds are high that we will get the credits, but it is not a simple process,” Fleming said.

He said the fact that the downtown area and surrounding neighborhoods are part of a “food desert” should go a long way in securing the tax credits. The food desert designation refers to residents needing to travel a good distance to have access to fresh food. Both the North Lawrence and East Lawrence neighborhoods have been advocating for a downtown grocery store to address the food desert issue.

If approved, this will be the sixth store for Queen’s Price Chopper. It operates stores in Overland Park, Paola, Spring Hill and Bonner Springs.

Reilly said demolishing the Borders building to allow for a larger store to be built is a key part of the plan. He said the company explored using the existing Borders building but didn’t feel comfortable that it would be large enough to act as the full-service grocery store that he believes community members want.

“This will allow us to have the full variety of offerings that will make it a destination for shoppers,” Reilly said. “You want a store that the community can be proud of, and we know the store has to have what the customer wants.”