The city will take bids from nonprofit agencies for the construction of affordable housing on a lot at 1747 15th St.
The City Council voted 6 to 1 Tuesday night to open the project to bids, rejecting a staff recommendation to sell the land to Community Corp. of Santa Monica, which originally proposed the construction.
Council members praised Community Corp. but supported giving other agencies an equal chance to bid for the project. That decision came after several representatives of the Neighborhood Resource Development Corp. complained that they were being denied a "fair shake" in construction opportunities.
The Neighborhood Resource Development Corp., which has overseen the rehabilitation of several buildings in Santa Monica, is based in the Pico neighborhood near the housing site.
The land belongs to the city and was originally intended to serve as expansion room for Woodlawn Cemetery. Community Corp. had offered to buy the land for its market value, about $281,000, and proposed building nine units of housing for low- and middle-income tenants.