SAN MARCOS ---- Despite a series of setbacks and a change in the cast of characters trying to turn a vacant trash recycling center in southwest San Marcos into a movie studio, city officials said Monday they are still very much behind such a use for the site.

City Council members said they were excited to hear that the property owners are negotiating with a Hollywood group and stopped the sale of the site to a company for construction of an action sports complex.

The proposed sports complex faced strong opposition from a group residents living in nearby San Elijo Hills, and several of these residents said Monday they were interested in learning more about the plans for a movie studio.

The City Council designated the site for a movie studio in April 2004, but the future of the site became unclear when the production company initially interested in a studio never purchased the property.

San Diego real estate investors John Baldwin and Conrad Prebys bought the site for $8.75 million on Feb. 28, and a company called World Motoplex announced in August that it was in the process of buying the site to build an indoor go-kart and dirt bike racing course.

But Baldwin said Thursday the deal with World Motoplex is not happening, and he is negotiating with a "qualified and significant Hollywood group that would like to see a movie studio come to fruition."

The surprise announcement was good news to council members.

"I thought the studio was a thing that had gone away and to see it back is a good thing," said Councilman Mike Preston. "We were excited about the studio, and I think the community was excited about the studio."

The council heard only positive comments from residents since they approved a studio on the site more than a year ago, said councilwoman Pia Harris-Ebert.

"San Elijo Hills is a neighborhood that will always look our for their community to make it the best they can be," said Harris-Ebert. "I think their efforts against World Motoplex had an influence on the applicant."

After hearing a presentation from World Motoplex executives, a group of residents in San Elijo Hills said they didn't want a racing facility less than half a mile from the center of their community.

Residents had concerns about noise and traffic from the facility, and said they would be interested to know what type of noise and traffic a movie studio would generate.

"I think this is something that needs to be researched and understood," said Jim Palmer, a San Elijo resident who was part of the group who opposed World Motoplex's proposal. "The use for that facility needs to be compatible with the homes in San Elijo Hills and Old Creek Ranch."

Traffic is an issue that needs to be looked at, but a movie studio would be a "great fit with the assets of San Marcos," said Councilman Jim Desmond.

He said a movie studio could coordinate with film programs at Palomar College and Cal State San Marcos.

"A studio would be wonderful and could draw on the talents of the faculty and students," said Jill Watts, who coordinates the film studies program at Cal State San Marcos. "It would be wonderful for students, and it could perhaps give them the opportunity for internships and hopefully future jobs."

The studio would be the first in North County, and could draw supporting businesses that provide raw materials for production to the area, said Gary Knight, the president of the San Diego North Economic Development Council.

Councilman Hal Martin said the studio could bring other amenities, such as a hotel, to San Marcos.

Martin said he hoped the studio wouldn't just be a "mind deal," and the county would not stop the project.

The property has a deed restriction preventing any use except trash and recycling, and the restriction was designed to make sure the property was compatible with the neighboring county landfill, which closed in 1997.

James O'Day, senior deputy county counsel, said county staff modified the restrictions for the production company initially interested in creating a movie studio, but that that company failed to respond.

O'Day said the board of supervisors would have to vote to modify the restriction for a movie studio.

Baldwin said last week he didn't think the county restriction would be a problem, and he also said the city officials seemed in favor of the project.

City Manager Rick Gittings said plans for the studio wouldn't even have to be reviewed by the council if they followed the guidelines of the approved plan.

"I think a movie studio would be great because that is what the specific plan calls for," Gittings said. "This is exciting for all of North County, and not just San Marcos, and hopefully we can move forward with this new type of business."