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Staff recommends using reversionary right to return 1504–1506 I Street to nonprofit housing use
Summary
City staff told the Community Economic Development Committee they will ask council to declare two former Opportunity Council properties surplus so the city can briefly accept title and immediately transfer them, by RFP, to a nonprofit for continued use as low-income or transitional housing.
Tara Lisonbee, the city’s community and economic development manager, told the Community Economic Development Committee on Feb. 9 that staff will recommend the council declare 1504 and 1506 I Street surplus to the city’s needs and direct an RFP-based, below‑market disposition to a nonprofit operator.
Lisonbee said the two-parcel site in the Lettered Streets neighborhood is roughly 5,000 square feet and appears to be a former single-family home converted to a duplex with two 2‑bedroom, 1‑bath units. She said the property’s market value is about $710,000 and that it was conveyed to the Opportunity Council in 1990 for use as transitional housing under a reversionary clause.
“Back in 1990, the city conveyed this asset to the Opportunity Council for transitional housing,” Lisonbee said. She told the committee the conveyance included a reversionary right allowing the city to retake the property if it ceased to be used as intended, or require repayment of the original loan; she said the original loan was $145,000 and that, with interest, would be more than $600,000 today.
Because the Opportunity Council recently informed staff it could no longer operate the property, staff said it considered two options: require repayment and allow the Opportunity Council to put the house on the private market, or use the city’s reversionary right to reclaim the site and transfer it to another nonprofit. Staff recommended the latter to keep the property available for low- or extremely low‑income households and to avoid placing the asset on the private market.
Lisonbee said staff contacted local nonprofits and identified at least four entities interested in running the property. She described a planned back-to-back, same‑day title transaction: the city would briefly receive title from the Opportunity Council and immediately convey it to an RFP-selected nonprofit at closing, minimizing the city’s holding costs and operational burdens.
Staff outlined the procedural steps: tonight’s public hearing, a council declaration that the site is surplus to the city’s needs, issuance of a below‑market RFP that prioritizes operator capacity and alignment with the consolidated plan, and contract negotiations led by Katie Sullivan with support from Samu Letts and Amy Cram.
The committee treated the item as information; Cotton reminded members a public hearing that evening could result in council action.
Next steps: the city will hold the scheduled public hearing and, if the council declares the property surplus, issue the RFP to select a nonprofit operator and execute the same‑day transfer process.
