Amid a housing crisis, a new downtown Anchorage development could be a model for public-private partnerships

In an interview before he took office last year, Mayor Dave Bronson painted an idealistic vision for what downtown Anchorage could look like.

“Where people live in high rises and they’ve got one stall underneath for their Subaru or whatever, they walk down to a Whole Foods store and then they take their bikes on a bike trail,” he said, drawing comparisons to the cosmopolitan cities he visited as a commercial pilot.

Bronson is not alone in his vision, said Jeanette Lee, a senior researcher at Sightline Institute, a think tank that studies housing and other issues across the country.

“Pretty much every administration prior to his has said they want downtown to be a vibrant, 24/7 activated space in the city,” she said. “Well, you cannot just depend on office workers and tourists to make that happen. You have to have people actually living there.”

Longtime Anchorage developer Shaun Debenham is working to make that happen this summer with a new 48-unit market rate housing development called Block 96 at the corner of 8th Avenue and K Street. Last year he partnered with the city’s Community Development Authority, which owns the land Block 96 will sit on. The city put almost $2 million into the $11.4 million project and provided the land, with a 50 year lease — it’s a first-of-its-kind public-private partnership for the city to make new market-rate housing actually feasible. 

Debenham said he’s excited to deliver Block 96 because it could serve as a model for other downtown housing developments. With the city’s housing crunch, he said, it’s desperately needed.

“It’s just a drop in the bucket of the total number of units that we need here in Anchorage. We need hundreds of units coming online every year, not 50, or 48 units,” he said.

Data shows people want to live downtown. A 2018 survey from the Anchorage Economic Development Corporation placed it in the top three most desirable neighborhoods in the city. 

But market rate housing downtown is limited, and new construction is scarce. Only two new multi-family housing projects have gone up in the area in the last few decades. Some developers like Debenham are working to change that, but it requires creative financing solutions and a lot of commitment to seeing the project through.

“I always kind of give the analogy of death by a thousand cuts,” said Debenham. “So it’s been difficult over the last 18 years to really solve this problem that we have, because any solution that we come up with, well, you’re just fixing one of a thousand problems.”

It’s not just the markup on materials that you’d expect in Alaska. Debenham points to the city’s restrictive building codes as a bigger hurdle to building multi-family housing. He said setback requirements, for example — the distance a building has to be placed from the road — make it difficult to build dense housing on land downtown, which is already more expensive than land in other parts of town.

Construction will often require utility upgrades, like extending sewer or stormwater lines to a downtown property. The developer has to foot those costs, plus the cost of closing busy downtown streets to make those upgrades. 

The end result is a building that’s valued at less than what it actually cost to build. 

“And that’s why we’ve seen less than 100 units built in the last 18 years here in Anchorage,” said Debenham.

Other developers have approached the housing crunch with creative solutions. Seth Andersen, an Anchorage structural engineer, last year completed five snug condos in a downtown lot that was originally zoned for a duplex. 

Andersen, a fan of smaller, more efficient housing architecture, said he took the “hard route,” working with the city to rezone for higher density. The process took about a year, and it’s probably not something most developers would have had the patience for. 

“I think they would think hard about it, they would have to really make sure it was worth it. It’s challenging,” he said. “Most people might have to hire another professional to do that work for them. And that on top of the fees and the surveying costs can add up.”

And while he’s excited to see a new building go up, he’s not thrilled that the city chose to directly add cash to the project.

“If the public has money to put into incentivizing housing, I’d rather see it put into a use that would benefit multiple different housing developers downtown,” Andersen said. 

He argued the city could make the process easier on the front end by making lots utility-ready for construction, creating a shared parking or storage facility, or providing better access to parks or the greenbelt. 

Debenham said a 12-year property tax abatement incentive was a major reason Block 96 is moving forward, and he’d like to see it extended city-wide.

“We talked about the thousand cuts, well, property tax abatement probably represents 400 of those cuts. It’s a very, in my opinion, low hanging fruit that we can incorporate right away,” he said.

Debenham expects Block 96 will break ground in the next few weeks and be completed by the end of next summer. And developers and housing advocates are waiting to see whether it’s a success — and if it can attract more investment to the area.

Since so few buildings have gone up in recent decades, there’s an untested market for multifamily housing downtown, said Tyler Robinson, vice president of community development and real estate with Cook Inlet Housing. 

That was an issue a few years ago when Cook Inlet Housing was looking for funding for Elizabeth Place, a 50-unit mixed income development a couple blocks from where Block 96 will sit.

“I don’t think there’d been housing built in downtown in 50 years, that’s hardly a comparable project to understand the value,” Robinson said. “And so inherently you have an appraisal challenge, and when you have an appraisal challenge, you then have a lending challenge.”

Robinson hopes Block 96 will provide a benchmark to encourage lenders to invest in other housing developments downtown.

This week the Bronson administration and another builder announced a separate $200 million mixed-use development downtown that includes some housing units. 

According to Robinson, the way to move the market forward is by city and developers continuing to partner.

“Because without that participation, you never get over that situation where you just have an unproven market. They need each other. Both parties are needed at this table.”

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