An affordable housing project could replace a city-owned garage after City Council approved a resolution Tuesday that declared 1318-1320 4th Street as exempt surplus land.

Council also declared the City-owned property at 1636 5th Street and master-leased property at 1333 4th Street, which is sub-leased by the City to Chase Bank through April 2022, as surplus land during a trio of motions that sought to bring the City into compliance with a new version of the state’s Surplus Lands Act.

The master-leased property at 1333 4th Street was previously approved by Council for a hotel, retail, office and open space development known as the “The Plaza” after a competitive request for proposal process; however, Council terminated the negotiations for The Plaza development in December 2020.

The new version of the Surplus Lands Act requires the actions from governments who own land so entities wishing to purchase the land for certain uses have the opportunity to make a bid. It does not distinguish whether a short-term lease constitutes a disposition of property and staff deemed it necessary to declare the Chase Bank parcel as surplus land this week.

The declaration of surplus status does not force a sale and neither does the declaration of exempt surplus land, according to Interim City Attorney George Cardona. It only serves as a prerequisite to proceeding with negotiations with the individuals who have expressed interest with the city’s RFP process.

“So, if Council’s desire is to maintain (318-1320 4th Street) as a parking lot and not proceed with negotiations with the affordable housing developers to see what the agreement or what terms can be reached for the development of affordable housing, then you shouldn’t declare it exempt. But if you wish staff to explore with the affordable housing developers who have responded to the RFP to see if terms can be arrived at on which the city would proceed under the RFP to develop it as affordable housing, then before staff can engage in those conversations and negotiations, it needs to be declared as exempt surplus land. Otherwise, staff would be precluded from participating in those negotiations,” Cardona said.

“It’s exploration rather than giving a definitive answer,” Councilmember Phil Brock said before he and his peers unanimously supported the three motions.

Since staff anticipates the expiration of the master-lease in February 2026, city leaders will likely return to Council to review redevelopment opportunities for the previously proposed Plaza site and seek Council’s declaration of all of the parcels comprising the site as surplus land or exempt surplus land, depending upon Council direction for future redevelopment.

Brennon@smdp.com