Fourteen people are running for four Juneau Assembly seats this year. Three are running for two school board seats. But perhaps the most contentious race in Juneau’s Oct. 3 municipal election is between city leaders and skeptics of the need for a new city hall.
The only proposition on the ballot this year asks voters whether or not to fund a new city hall through a $27 million bond. Last year, voters narrowly rejected a $35 million bond proposal for the project. This time around, the city is ramping up messaging about the benefits of a new building.
Supporters of the ballot measure say the city should be spending its money on a building the city owns rather than renting aging facilities and making expensive renovations. Opponents say now isn’t the time to bond for a new city hall — and they say the city should have listened to voters last time.
At a forum co-hosted by KTOO, outgoing City Manager Rorie Watt said building a new city hall was about being “better with the public dollar.”
“We have to do something, and the question is: What’s the best use of our money?” he said. “A new city hall is something we would own together, and we as a community would build equity and own that facility. Continuing to rent means that other people get those profits.”
How much would it cost?
The city’s preferred location for a new city hall is on Whittier Street, next to the Zach Gordon Youth Center and across the street from the state museum.
City leaders say building a new city hall with underground parking would cost $43.3 million, and that it would break even after 32 years. Part of that calculation includes rent the city won’t be paying at other spaces and revenue from the sale of the old city hall building.
The existing city hall isn’t included in property valuation assessments because it’s owned by the city. But similarly sized nearby buildings are worth about $3.5 million, according to Rain Coast Data.
The break-even year depends on the size of the city’s down payment and how much rent for office space is expected to go up each year. A 2022 analysis by Rain Coast Data estimated that a $38.2 million project – the estimate at the time for the Whittier Street project – would break even after 52 years if rent went up 2% per year and 35 years if rent went up 5% per year.
Critics have said that in Alaska’s expensive construction market, it’s hard to guarantee it won’t cost more than $43.3 million to build a new building. The city’s chief architect said in May that when the city used its usual procurement method, some recent bids had been “significantly over the professional estimate” – up to 1.8 times the estimate.
But Watt said the city is proposing a design-build procurement method for a new city hall instead. That means they’d work with a designer and contractor from the beginning to figure out what amenities, building materials and schedule would work at a $43.3 million price.
Would property taxes go up?
Many critics link their opposition to the ballot measure with their frustration over higher property taxes. Both are core issues for several of this year’s Assembly candidates. According to the city, property values increased by 13% this year across the borough.
In June, the city approved a budget with a 10.16 mill rate, the lowest it’s been in decades. Setting it that low required the city to put less money into savings and draw $2 million from reserves for recurring costs. They also put $10 million toward “renovating the current City Hall or building a new City Hall.”
Local advocacy group Save Juneau, which opposes building a new City Hall, wrote on their website that the Assembly put $10 million toward city hall “rather than return those funds to citizens in the form of property tax relief.” Last week, the group endorsed District 1 candidate Joe Geldhof, District 2 candidate David Morris and areawide candidates Nano Brooks and JoAnn Wallace, who all oppose the ballot proposition.
According to the proposition, the mill rate isn’t expected to go up if the bond passes because the city has enough debt capacity. A portion of the mill rate is set aside for debt service. That money goes toward paying off bonds the city has taken on over the years, like the one that paid for the recently completed Centennial Hall renovations.
The city paid off multiple bonds during the last fiscal year. Angie Flick, the city’s finance director, said that will free up space for new debt.
“If the voters approve this item, we could issue a bond and take the place of the debt that’s retiring with new debt,” she said. “We could structure the bond for a new city hall such that it fits within the mill rate, taking into account the debt that we have coming off our books.”
The city would pay back $1.87 million per year, assuming an interest rate of 4.77%.
Where else could city employees work?
Fewer than half of city employees work at city hall. The rest work in four other buildings downtown, in office space the city rents. The city’s lease of two floors in the Municipal Way building ends in June 2028. Another space – the Marine View Building – has frequent plumbing issues.
“We just got notified that they’re going to shut down the water again for a couple of days, so we either have to send everybody home, or get hand sanitizer stations and port-a-potties on the sidewalk,” Watt said at the forum.
Getting out of the Marine View Building could also free up apartments in the building and parking in the garage underneath.
Tracey Ricker, a real estate consultant hired by the Assembly, found that there are no existing commercial properties that could fit all city staff without displacing other tenants. U-Haul now uses the former Walmart building, so that’s no longer an option.
But there is one building that could fit a good portion of city workers: the Michael J. Burns Building – formerly known as the Goldbelt building – which the Alaska Permanent Fund Corporation now owns. There’s 24,000 square feet of office space available for rent there, according to Ricker’s website. Right now, the city rents nearly 34,000 square feet of office space across four buildings.
At the forum, Watt acknowledged renting space in the Michael J. Burns Building could be an option for some of the employees.
“But that would just be delaying the consolidation and delaying the benefits of a centralized workforce,” Watt said. “It would be delaying the benefits of the public being able to go to one place. It would be delaying the benefits of the public eventually saving money by building a new city hall.”
The city would also still have to maintain and renovate the current city hall, which has cracking walls, leaking ceilings and asbestos in the carpet. City leaders say renovating it would be an expensive, disruptive project.
“City Hall maintenance has been limited, because quite frankly how much good money do you want us to throw at the bad?” asked Assembly member Wade Bryson in an opinion piece in the Juneau Empire. “It is difficult to justify spending $14 million to renovate a building worth $3.5 million that will still only hold a third of the city’s downtown employees.”
Why is it back on the ballot?
Opponents to this year’s ballot measure say city leaders won’t take no for an answer. Juneau resident David Ignell said the $10 million allocation showed the city wasn’t listening.
“You didn’t want this $35 million bond, so we’re not going to take money out of your left pocket, we’re going to take money out of your right pocket,” Ignell said at the KTOO forum.
Watt said he and the Assembly knew some Juneau residents would disagree with their decision to put it back on the ballot.
“But we can’t really stomach the thought of wasting the public’s money,” Watt said.
The city has brought bond proposals back to voters before after they failed. Ballot measures to fund projects like the downtown parking garage, the Treadwell Ice Arena and the Marine Park expansion succeeded after the city changed how they were funded or the scope of the project.
This year, the city is spending $50,000 to advocate for the project. The Alaska Public Offices Commission requires the Assembly to appropriate funds through an ordinance if it wants city staff to share information that could influence the outcome of an election.
In a Juneau Empire opinion piece, former Juneau Mayor Bruce Botelho compared the existing city hall to a family’s old Toyota.
“It’s long since lost its warranty, and the estimate for repairs of the suspension and a transmission rebuild easily exceed the value of the car,” he wrote. “Is it time to look at purchasing a new vehicle? If not now, when?”
Last year, just 246 more people voted against the $35 million bond proposal than for it. In a few weeks, city leaders will find out whether their outreach campaign has changed enough minds.
