DOWNTOWN — Today it’s the site of a couple of drab bank buildings, but City Hall officials say the southeast corner of Fourth Street and Arizona Avenue could be much more.

The City Council last week agreed to pay $42.5 million for the 52,500-square-foot property, a purchase that officials said will complement 67,500 square feet of already City Hall-owned real estate on Fifth Street south of Arizona Avenue.

There’s no plan for the properties yet, but officials said the area will be a key part of bringing more open space — and more pedestrian traffic — to parts of the city center that border the Third Street Promenade.

“It’s in a location that really lends itself to doing a lot of good for the downtown,” said consultant Rob York, who worked with the Bayside District Corp. on the transaction.

Councilman Kevin McKeown said the purchase was a part of a plan to build on the promenade’s success.

“So long as the small individual properties surrounding the promenade were individually developed, we’d never get the integrated planning it will take to create a larger public space,” he said.

The site could become a mixed-use development that includes a large public plaza or park, he said. A subterranean parking garage could also be part of the package.

Housing and Economic Development Director Andy Agle said the transaction is likely to be the last large purchase City Hall will make in the downtown area.

Meetings to begin developing a concept for the property and nearby City Hall-owned parcels could begin in the fall, he said.

Under the terms of the deal the council unanimously approved last week, the city’s redevelopment agency would purchase the property for an amount not to exceed $42.5 million, financed by the sellers at 6.75 percent. The annual payments would start at $1.6 million and would grow to $3.6 million by 2042. The RDA in turn would lease the property to City Hall to cover the cost of the repayments.

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