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One of the leading sites to house the residents of a homeless encampment in Minneapolis has a big legal problem: the city might have to find an extra $6.8 million to use it.

On Thursday, the City Council will hear a recommendation on relocating dozens of people who are living in tents along Franklin and Hiawatha avenues. Mayor Jacob Frey has said he hopes to set up temporary shelters by “very early October.”

Two city-owned properties under consideration, a vacant lot at 2600 Minnehaha Av. S. and the former Roof Depot property, are already stoking political and community debate.

“Are these places perfect? Obviously not,” said Council Member Abdi Warsame, who represents the area where the homeless camp is now. “Can there be any places in the city that we investigate? We do have other places that might be more suitable.”

In 2016, the city acquired the former Roof Depot on E. 28th Street for its Public Works Department, which is planning to expand its operation and relocate water distribution employees and operations to one central site. Because the city used $6.8 million in utility fees to buy it, the property comes with a significant restriction.

“If it’s not used for water-funded utility purposes, we have to repay the water fund,” said Mark Ruff, the city’s chief financial officer.

Council Members Warsame and Andrew Johnson said they are not sure if the city could use the site for the Hiawatha encampment residents.

“That site has to be used for water-related purposes or the money has to be paid back,” Johnson said. “But I don’t want that to be a barrier in the short term.”

But the other proposed site is generating community opposition. Leaders of two charter schools have voiced objection to moving Hiawatha encampment residents to the vacant lot at Minnehaha Avenue. The school leaders said they were concerned for the safety of their students, who might be exposed to drug activity and crime.

Council Member Alondra Cano said those are reasons to use the Roof Depot site, although not the existing building, which has mold and structural defects.

“At the Roof Depot location, people wouldn’t be moving into a building,” Cano said Wednesday. “They would be moving into a parking lot with some kind of structure we bring in.”

The city could provide trailers or pop-up tents to the homeless people if they are moved to the Roof Depot parking lot, which is bigger than the site at 2600 Minnehaha Av. S., Cano said.

“It’s a short solution to the winter that’s coming and then it gives the city more time to figure out what that long-term low barrier access to housing would be,” she said. “I’m afraid that if the homeless encampment moves to the lot by the school, the city will forget about it. There will be no pressure to solve the issue for the long-term housing and potentially the camp could keep growing.”

The city would be under pressure to find housing for the homeless and move them from the Roof Depot as the Public Works Department expands its operations, she said.

City officials said there’s an urgent need to relocate the homeless people. David Frank, the city’s community planning and economic development director, said he will make a site recommendation Thursday to the City Council.

Frank said city-owned vacant land was being sought to relocate the homeless people as opposed to a building. “It takes a long time to renovate a building, to make them suitable for people to live in — and it costs a lot of money,” he said.

Mukhtar M. Ibrahim • 612-673-4689