Layer - 0 make the background color Brown, like the color of the doorways.
Layer - 1 create storefronts > sidewalk.
Layer - 2 create the trees.
Layer - 3 create the road.
Layer - 1 Add by standers 1st. Then a player on that layer.
Layer - 3 create 2nd player.
Create enemies, animations on their respective layer.
For a 1 player game - start them on the road. If the want to move to the side walk > push up on the controler > move player to layer 1.
May have to mess around with it a bit. Especially the solid trees so the player doesn't morph through them.