Minneapolis city officials and transit planners are negotiating a possible compromise that could be revealed next week regarding the controversial plans for the Southwest Corridor light-rail project.

Two sources familiar with the negotiations said Thursday that a compromise under consideration involves dropping plans for a light-rail tunnel north of a water channel in the Kenilworth corridor, running the light rail at ground level there and restoring a nearby station.

Minneapolis might receive a portion of the savings resulting from not digging the north tunnel.

A light-rail tunnel planned for south of the channel would still be built under such a deal.

The city announced late Thursday that it would hold a public meeting Tuesday on the $1.68 billion project, the most costly transit venture in the Twin Cities, but provided few details. Aides to Mayor Betsy Hodges did not respond Thursday to questions about the meeting or a potential deal.

The proposed line would run nearly 16 miles from downtown Minneapolis to Eden Prairie. Kenilworth corridor residents and Minneapolis officials have opposed running a light rail near existing freight trains. The Metropolitan Council, the agency overseeing the project, last year offered light-rail tunnels north and south of the channel as a concession. It didn't satisfy some corridor residents.

But eliminating the north tunnel would still upset some nearby corridor residents, while pleasing others in Minneapolis who want a station in the corridor near 21st Street.

"It allows us to connect Franklin Avenue bus service with the Southwest line," said Andy Hestness, vice president of the Native American Community Development Institute, who is not privy to the negotiations.

A station in the corridor at 21st Street was originally contemplated for the Southwest project but dropped last year by the Met Council because it would be costly to reach if the transit ran in a tunnel north of the channel between Lake of the Isles and Cedar Lake.

The five cities along the Southwest route have until July 14 to approve the Met Council's two-tunnel plan or to offer an alternative. Hopkins and Minnetonka have approved that plan, and St. Louis Park and Eden Prairie have scheduled votes on it.

Minneapolis has not scheduled a vote and has been negotiating in closed-door meetings with Met Council representatives and a mediator.

One source familiar with the talks said it was "very possible" that eliminating the north tunnel and running the light rail at ground level north of the channel with a 21st Street station would emerge as part of a compromise.

Another source described the tunnel and station options as among several "moving parts" under consideration.

Homes north of the channel are farther from the proposed light-rail tracks than are townhouses and condos south of the channel, where a tunnel would still be built under the deal being considered.

"We'd like to see the 21st Street station return to the plan, and dropping the northern tunnel accomplishes that and is cost-effective," Hestness said.

Noting that Minneapolis hasn't held a required public hearing on the project, he added, "I'd like to hear a clear statement from the city on what their position is. … If they don't yet have a sense of what their position is … open this process up to the citizens of Minneapolis so we can weigh in."

The city said the meeting next Tuesday evening at 7 p.m. at Anwatin Middle School auditorium would provide "an opportunity for public comment on the project." It wasn't clear from Thursday's announcement whether the meeting will fulfill the city's requirement for a hearing on the Southwest plans, or whether another meeting might be held to get public comment.

Pat Doyle • 612-673-4504