New affordable apartments downtown built to replace a current parking structure will likely be reserved for people experiencing homelessness.

City Council voted Tuesday to demolish a public parking structure at 1318 4th St. and replace it with affordable housing. The City of Santa Monica will solicit proposals from developers to build 100 to 150 apartments on the site and will prioritize proposals for permanent supportive housing. The building will also include affordable commercial space on the ground floor and may incorporate live-work studios for artists.

The structure at 1318 4th St. is heavily used but has long been slated for demolition and its parking capacity has been shifted to a nearby parking structure. The City worked with two companies for more than a decade to replace the structure with a movie theater, but both companies have withdrawn from negotiations.

The City will pay around $3 to $4 million to demolish the structure and remediate the soil and will contribute anywhere between $5 million and $21 million for construction, depending on the number of apartments and design of the project. It will save $13,600,000 to $32,700,000 in land acquisition costs associated with building affordable housing because it owns the site.

Council decided to favor proposals to build permanent supportive housing for individuals experiencing homelessness on the site. Permanent supportive housing is affordable and includes services that keep chronically homeless individuals housed, which might include mental health or substance abuse treatment, primary healthcare and domestic violence services.

Council voted last month to prioritize building affordable housing as part of its plan to reduce homelessness, as well as to explore replacing the downtown homeless shelter Samoshel, which was built 25 years ago as a temporary facility. 1318 4th St. had been proposed as a possible location for a new Samoshel, but Council favors using the site for permanent supportive housing.

The City has not funded permanent supportive housing in the last year, but there are more than 100 people who need it, said Andy Agle, director of housing and economic development. Recent permanent supportive housing projects include Step Up on Colorado and Step Up on 26th. The registry of homeless Santa Monicans includes 95 individuals who have reported not having permanent housing and another 44 whose housing status is unknown, Agle said.

“At this point, we have not funded permanent supportive housing and we’ve done relatively well on funding senior and family housing,” Agle said. “I think the fact that we haven’t funded permanent supportive housing is important.”

There are several other affordable housing projects in the pipeline, but the City is projected to fall short of its goals in the development period of 2013 to 2021.

Under its affordable housing guidelines, which Council changed last month after deciding one rule incentivized developers to include fewer affordable units in their projects, staff projected that 25 percent of all new development will be affordable during that period. Proposition R, which voters approved in 1990, requires 30 percent of all new development to be affordable.

Council also voted Tuesday to explore building live-work units for artists and commercial space affordable to small, locally owned businesses on the ground floor.

Councilmember Greg Morena said he thinks the City should give preference to local businesses in selecting tenants for the ground-floor space.

“Locals often get left out of retail opportunities,” he said.

Correction: The original version of this article incorrectly stated the City of Santa Monica has not funded permanent supportive housing. In fact, it has not funded any such projects in the last year but has funded several in the past.

madeleine@smdp.com