Oakland sells land near Lake Merritt to developers for $8 million

The Oakland City Council has sealed the fate of a hotly contested piece of city-owned land near Lake Merritt that last year sparked a fierce battle over how public space should be used in a rapidly gentrifying area.

Dozens of Oakland residents packed City Hall on Tuesday, many of them holding signs with such slogans as “Keep Public Lands in Public Hands.” Despite their protests, the council voted 6-1 to sell the parcel for $8 million to real estate firm UrbanCore and the East Bay Asian Local Development Corp., which plan to build a 27-story apartment tower and nine-story mid-rise with 361 apartments, 108 of which would be affordable.

The agreement requires UrbanCore to pay $4.7 million up front but stipulates that the city will lend $3.3 million to East Bay Asian Local Development Corp. to complete the purchase. Councilwoman Rebecca Kaplan recused herself from the vote, citing a campaign contribution.

“The bottom line is we need housing, and we need housing for multiple income levels,” said Councilman Abel Guillen, who made the motion to approve the project.

But the plan drew sharp criticism from Councilman Noel Gallo — who cast the lone dissenting vote — and from residents who accused the city of using a public asset to indulge a for-profit developer.

“If it belongs to the public, it needs to remain with the public,” Gallo insisted.

UrbanCore’s president, Michael Johnson, was also the developer behind the city’s previous ill-fated deal to build a market-rate project on the East Lake parcel. The council abruptly scrapped that plan after a memo leaked from the city attorney’s office saying it violated a state law governing the sale of surplus land.

“I think the message you are going to send today if you sell this land is that Oakland is for sale,” said Cliff Lau, who helped design an alternative “People’s Proposal” that would have reserved the land solely for affordable housing. The council rejected that idea earlier this year when it opted to pursue a second deal with UrbanCore.

Rachel Swan is a San Francisco Chronicle staff writer. Email: rswan@sfchronicle.com Twitter: @rachelswan