The Gainesville City Commission voted to retake ownership of a downtown lot and still allow a developer to construct a 115-unit, multistory residential building to replace the current surface parking lot.

The City Commission also agreed to give vacant parcels in the Heartwood neighborhood to a nonprofit for 16 future homes.

Lot 10 has been a parking lot in downtown Gainesville for more than 50 years. At the Thursday meeting, Mayor Harvey Ward showed a photo of the lot from 1972, and for at least the last decade, Gainesville has tried to sell the land for development.

Interim City Manager Andrew Persons said the big benefit to the city would be the construction of high-density, mixed-use development in the downtown core, helping support the area’s economic development and providing a number of affordable units for the city’s portfolio.

“We absolutely want to break ground this year, too,” Persons said. “We will move heaven and earth in terms of making sure that they’re not waiting on the city at any point along the way to make that happen.”

Despite everyone seeming to agree that a surface parking lot isn’t the best use for the land, especially with the city’s four-story parking garage diagonally across the street, the current project has also struggled to come to fruition, and multiple previous deals with different developers have also failed to renovate the site.

In 2022, Gainesville sold Lot 10 for $2,045,000 to the AMJ Group. The city added provisions in the sale contract that required construction to begin within a certain time, and AMJ Group asked for multiple extensions to the deadline. In December 2024, city commissioners signaled they were running out of patience with the extensions.

One recent hurdle has been the city’s plan to turn the section of SW First Avenue in front of Lot 10 into the Streatery, closing access to vehicles. The two projects were on separate timelines, yet AMJ Group said it didn’t want to proceed with construction when the building’s front doorstep might immediately get torn up as a part of Gainesville’s Streatery construction.

The deal struck between the city and AMJ Group and ratified unanimously on Thursday would have the developer (AMJ Group working as 150 SW Second Avenue Holdings, LLC) give ownership back to the city and then lease the property for the next 60 years.

The plan first appeared before the City Commission in August 2025.

The original sale price would cover the developer’s rent for the first 30 years, and the developer would be required through the contract to build 104 residential units on the site. The developer would then sell and rent those units.

After the first 30 years, around 2056, AMJ Group would begin to pay rent to the city of Gainesville or choose to purchase the land for the appraised value. If they choose to rent, the contract stipulates a cost of $34,000 annually along with a 2% annual increase and periodic inflation adjustment.

Besides rental units, the city would also require that the ground floor have a minimum of 5,500 square feet of commercial space, which could include retail, building amenities, lobby, lounge, fitness or community rooms.

The building must be at least seven stories and contain at least 104 units, including 70 units restricted to 120% or less of the area’s median income. The city said it may also purchase 11 units in the building to make available at less than 50% of the area’s median income.

The cost to purchase all of those units would likely top $1 million, according to backup documents.

Anthony Lyons, vice president for AMJ Group and former city manager, said the project has a foundation permit going before the city in April. He said splitting the foundation from the rest of the building permit might allow the project to proceed quicker, getting the long foundation construction finished while putting final touches on the building design.

“The foundation is fairly complicated on an urban site like this for lots of different reasons,” Lyons said. “If we can get a jump on the foundation design, the geotech, we will let that process go.”

The 60-year ground lease would allow the project to take advantage of state tax exemptions and help the project’s overall cost. Because the city owned the property, it’s not collected taxes until the sale to AMJ Group.

Ward and Persons both said governments entering ground leases are fairly common. It’s just newer for Gainesville.

The City Commission also voted to list 16 parcels within the Heartwood subdivision as surplus and begin the process to give them to a nonprofit in order to build new homes. The city would also assist in the construction costs with $1.4 million.

Persons said the city couldn’t continue building a house and selling it to fund the next one because of rising construction costs. This model meant the last three homes in the subdivision were sold for a loss and pushed the city to look for a new way to develop the remaining lots.

The commission gave approval to the city manager to enter a contract with a responding nonprofit for the work.