A historic but aging plaza in the heart of downtown Minneapolis likely will avoid the wrecking ball after negotiations between preservationists and the city.

The City Council voted more than a year ago to authorize demolition of Peavey Plaza, on 12th Street and Nicollet Avenue, to make way for a more open, event-friendly space (pictured below). But preservationists fought the plan, first at City Hall then in district court, arguing the 38-year-old plaza is historically significant.

It appears their legal fight has paid off. Assistant City Attorney Erik Nilsson said Thursday that the demolition permit has expired and the two sides are trying to reach a settlement.

Settlement discussions are centered on "attempting to reach consensus on a design that preserves more of the original Plaza design" while also improving handicap accessibility and ease of hosting events, Nilsson wrote in an e-mail. Those changes could be slight enough so as not to even require a new demolition permit, Nilsson said.

That settlement must be reached by August 23, when a judge is slated to hold a hearing on the matter.

A spokesman for the Preservation Alliance of Minnesota said they have a similar understanding of negotiations, though they did not anticipate the city's public comments. They will have further statements this afternoon.

The settlement appears to be a setback for the City Council, which had high hopes for a $10 million redo -- largely privately funded -- to give the plaza new life. It was slated to coincide with a renovation of the adjoining Orchestra Hall, which is nearly complete.

Preservationists, which also include the Washington-based Cultural Landscape Foundation, say that famed landscape architect M. Paul Friedberg's 1975 design is one of his most important works. In January, the site was listed in National Register of Historic Places.