Square in La Paz needs renovation (5)
I believe the answer is:
plaza
'square' is the definition.
('plaza' can be a synonym of 'square')
'la paz needs renovation' is the wordplay.
'needs renovation' indicates an anagram (I've seen this in other clues).
'la'+'paz'='lapaz'
'lapaz' anagrammed gives 'PLAZA'.
'in' acts as a link.
(Other definitions for plaza that I've seen before include "Public square or market" , "Public square, in Italy" , "Sp. square, market-place" , "Shopping mall" , "The ____ Mayor is important in Madrid" .)