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The Assembly voted 6-2 to sell 31.5 acres behind the supermarket to developer Hugh Grant for $375,000, about $555,000 less than the city's previously assessed value.
An appraiser hired by Grant determined the sale price because of the parcel's steep topography and difficult access.
City Assessor Jim Canary said the estimate is fair. When he made the previous assessment, he had not visited the site and was unaware of the access problems.
The property cannot be accessed except through an adjacent parcel owned by Grant. If Grant fails to develop the city land within three years, he will have to return it.
Assembly members Marc Wheeler and Daniel Peterson voted against the sale. Assembly member Jeff Bush was absent.
Wheeler said if the Assembly approved the sale, it was allowing someone to drive prices down by locking up access to land.
"I am not comfortable without an open-bid process," Wheeler said. He suggested the Assembly table the issue but only Peterson and Stan Ridgeway supported him.
City Lands and Resources Manager Steve Gilbertson said the city didn't pursue a competitive bid process and negotiated with Grant instead because the city wanted to make sure the land is developed.
Alaska Department of Transportation officials said the best access to the city property is from Grant's land, where the traffic volumes would be lower and the grade of the road would be safer than that of other possible roads to the property.
Assembly member Randy Wanamaker said city staff had tried to find alternative routes to the property but failed.
"It is important to provide Mr. Grant the opportunity to develop this land so it can be safely and economically developed for affordable housing," Wanamaker said. "Without his purchase, it is inaccessible and unusable."
Tlingit-Haida Regional Housing Authority is interested in working with Grant to build affordable housing at the site, Wanamaker said.
Grant said he has been planning to develop the land for 10 years but he declined to reveal his plan.
Resident Joe Geldhof said he was disappointed with the Assembly's decision.
"This is a bad, bad deal for the citizens of Juneau," Geldhof said.
Geldhof said the city should gain access through Grant's property through eminent domain and then put the land out for bid.
"The city would have gotten more money," Geldhof said.
I-Chun Che can be reached at firstname.lastname@example.org.