Liverpool City Council is seeking to acquire the 85-acre site in Riverside Drive from Langtree Group in order to bring forward "a world-class cultural destination" in the park and a large housing scheme.
The council is in advanced talks with the property investment and development company to regain the leasehold interest in what it calls "a jewel of the city".
The proposal is to be considered by the city council's cabinet on 2 April, with a recommendation that the purchase be approved subject to a survey of the site and due diligence.
Under the plans, approximately 28-acres of the site would be used for housing development, with 66-acres being protected as open space which could be used for cultural activities.
Festival Garden is a former wasteland was landscaped and planted up in 1984 for the Liverpool International Garden Festival. A joint venture between Langtree and David McLean Group was granted a 99 year lease on the site in 2005, with plans to develop a leisure and retail park. David McLean went into administration in 2008.
A 150 year lease was then agreed with just Langtree, and the delivery of 1,300 apartments and 66 townhouses on one third of the site was approved in 2008. Due to the recession the residential development stalled, although Langtree completed the remediation of the parkland and opened it to the public in 2012.
Langtree says it is currently considering all options for the site and has been in dialogue with a number of potential partners.
Stephen Barnes, development director for Langtree, said: "We are proud to be associated with this important site and despite the considerable economic challenges we have experienced during the period of our ownership, we have successfully restored the gardens, opened them to the public, put in place a management regime for their maintenance and created a platform from which the site can be further developed."
According to a report ahead of the cabinet meeting, "acquiring this site and working with the Council's strategic housing partners to deliver its redevelopment will contribute to the aim of building 5,000 new homes. The site has consent for over 1,300 homes and although this development will have to be phased and may need to be redesigned with a lower density to make it viable it should still make a major contribution to this target."
Mayor of Liverpool Joe Anderson said: "The collapse of the housing development market brought about by the credit crunch in 2008 unquestionably created major challenges for all the partners who were involved in trying to bring forward plans for this site.
"We think the proposal on the table now represents a very positive way forward and that the city council is well placed to drive the potential of the site as both a visitor attraction and a development asset."