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Vacant or Vital, Part III: What help is there for building renovators?

Posted: April 10, 2013 - 11:14pm
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A sale of the Gross 20th Century Building reportedly fell through last summer. The building houses a number of unused apartments. The building is located between the Viking Lounge and the First National Bank buildings on Front Street.  Michael Penn / Juneau Empire
Michael Penn / Juneau Empire
A sale of the Gross 20th Century Building reportedly fell through last summer. The building houses a number of unused apartments. The building is located between the Viking Lounge and the First National Bank buildings on Front Street.

The Gastineau Apartments became the most newly-vacant structure in the Downtown area last November after fire and water damage displaced more than 40 residents and some small businesses. Residents of the once-busy complex, who generated street traffic and contributed to Downtown’s economy, were scattered into replacement housing, some in the same area.

Now dark with chain link fence at its front, the city, and many who live and work downtown, are eager to know what will happen next to the apartments.

The city says owner James Barrett is close to deciding the building’s fate — renovation or destruction.

For building owners looking to renovate structures like the Gastineau Apartments, originally built in 1917 and added onto since, there’s a lot to think about. New codes and handicap accessibility laws require a lot of upgrading along with renovating.

Apartments above the Gross Alaska Theater also sit vacant, although attempts have been made in the past to broker some kind of deal to get them rehabilitated.

A Juneau building official said the city has ways of assisting property owners who face tremendous obstacles — as long as the accommodations made to a project don’t endanger health and safety.

A Juneau-based expert in financing development through tax credits says tax credits are also a tool one could use to take old buildings and turn them around.

There appears to be no movement presently on revitalizing the Palace Theater and the apartments above the Gross Alaska Theater.

All that is certain with the Gastineau Apartments is that some retail space serving a few non-seasonal local businesses — a business type some want to see more of downtown — isn’t available and more than 40 people who might live in the area are not part of the economic mix.

Gastineau decision awaited

Gastineau Apartments owner James Barrett and his Seattle-based project manager are expected to contact the city soon. Barrett has not returned calls from the Empire.

Juneau Building official Charlie Ford said obstacles to renovating even a heavily damaged building like the apartment complex are not insurmountable, because the Community Development Department recognizes that old buildings may have some problems that are nearly impossible to completely work around.

“Health and safety stuff is always going to have to be brought up,” said Ford.

New sprinkler systems are required, for instance. Hazards would have to be abated, fire codes met and a new electrical system would have to be installed.

The inside of the structure is heavily water damaged, and a new elevator would be needed.

Ford noted that the building did have an elevator to start with, so that accessibility requirement has infrastructure built into the existing shell of the building.

“There’s a lot of flexibility about other things with existing buildings,” Ford said.

Ford said the city would not put unreasonable demands on a developer seeking to renovate an older property, especially if “it’s way too expensive to comply” with a code that does not impact health and safety due to an old building design.

He noted that there are grants and other programs that developers might research and apply for in addition to tax credits.

Ford said he and others are hoping the Gastineau Apartments can be repaired.

“Everybody in the downtown area wants to see that rebuilt,” Ford said.

Funding formulas spur growth

Juneau Housing Trust consultant Jeff Weltzin said there are many tools out there to assist developers, particularly tax credits aimed at increasing low income housing and tax credits to restore historic buildings.

The Juneau Housing Trust “represents a new approach to creating affordable housing for low-income Juneau homebuyers. It addresses the high land cost associated with Juneau homes by maintaining ownership of the land in trust for permanent affordability,” according to the Juneau Economic Development Council’s summary of housing groups and resources in Juneau.

Weltzin said federal tax credits administered by the Alaska Housing Finance Corp. equal $2.4 million per year under IRS Tax Code 42 — and since 10 years of credits can be available, the total adds up to $24 million over the life of the credits.

The vast majority of tax credit-funded projects in Alaska are built in Anchorage and Fairbanks, he said, and projects created through the credits are commonplace in the Lower 48.

He said the credits are excellent ways to help increase levels of affordable housing, citing the city of Cleveland as a municipality that embraced creating new affordable housing while fixing historic structures.

Weltzin said one such proposed project in Juneau was last year’s bid to renovate apartments above the Gross Alaska 20th Century Theater downtown. The plan was also to renovate the theater below the apartments, but the project organizers could not reach an agreement with the owners and parted amicably.

“That discussion is still going on,” Weltzin said, but as “low-level meetings. They’re still interested in entertaining some kind of redevelopment of their apartments.”

An inquiry to Gross Alaska Theaters was not returned.

The vacant Palace Theater on Franklin Street was not considered as an option while Perseverance Theatre and the Housing Trust were looking for a spot to build housing units and an arts theater, partly because it was assumed the building was in too poor a shape to fix at a reasonable cost.

After reading reports in the Empire of inspections to that structure, Weltzin said it, too, sounds like a building with potential for a rebirth in some form. The L-shaped structure that has facades on both Franklin and Front Streets houses a bank on Front Street, while the other part of the former theater has been shuttered for 12 years.

Weltzin, who is a rural development expert, uses a power point presentation to describe the complicated tax credit funding mechanism to those who inquire.

“Low Income Housing Tax Credits (LIHTC) provide financing for affordable housing with rents restricted to either 50 percent or 60 percent of area median income (AMI),” he wrote the Empire.

Among his educational materials is a chart of the Yukon Koyukuk census area, “which shows a family of four AMI at $68,280 while Juneau’s is $81,200. So if Juneau LIHTC rents were charged at 60 percent AMI, a household of four would be eligible to rent a LIHTC unit if their adjusted income was less than $48,720.”

He said historic tax credits “typically would not fund the actual residential component of a mixed tax credit project and are not income restricted like LIHTC is. There are other tax credits programs that could be mixed into a downtown development such as Renewable Energy Tax Credit.”

Despite the variety of credits out there, there is one commonality to the process.

“In all cases, the tax credits are sold to a federal tax paying entity who deduct them dollar for dollar off the bottom line of their annual federal tax return,” he wrote in an email.

Changing the retail environment

When the Gastineau apartments burned, residents were displaced, as well as a boutique and a skateboard shop. The building now is a dark spot between the popular Rockwell restaurant and businesses at the Franklin and Front intersection.

Some downtown say more local retailers are needed.

This Christmas holiday season, many shops between the empty Gastineau Apartments and the empty cruise ship docks made S. Franklin Street a popular retail destination — at least on weekends. Shoppers poured into the retailer Trove to buy high-end candy, unique keepsakes and purses among other things — to the point that getting to the register was a challenge.

Other businesses sold sweaters, scarves and clothing. The Senate Building was bustling, as well as the postal annex at Front and Franklin, and a toy store and a fudge shop helped fill stockings and more.

This is not the usual scene in that area after the cruise ships leave, but businesses do stay open among the darkened seasonal shops.

It will take more than some renovations to change the economic blueprint that presently defines downtown, and one retailer who made a conscious decision to stay open downtown through the winter says more year-round retail has to stake a place among tourism uses.

“It is going to take a turnover of tenants to take this interest in South Franklin and transform it from a secret for the retail faithful to something greater,” said Trove co-owner Michael Tripp.

Tripp said the area needs fewer seasonal businesses operated by outsiders,” and “more interesting shops owned by and catering to locals.”

“There are quite a number of great year-round stores from Front Street all the way down South Franklin to Trove, but there remain far too many gaps to even begin to call it a winter retail destination,” Tripp said. “Historically, South Franklin has always had gaps. Back in the day of the Armadillo and the City Café, there was nothing to anchor this area of town to the more bustling uptown region but empty lots, a printshop and the library. Not much has changed except that most of the empty lots are now occupied by empty storefronts that need to transform into “interesting” retail as opposed to vacant, seasonal jewelry stores.”

Tripp said bringing back local business to S. Franklin Street will “depend primarily on an improvement of the retail mix of this highly seasonal retail core. It is my hope that as rents continue to decline on South Franklin that more locally-owned retailers who can provide a product mix that is appealing to locals will be able to afford to move into this area, succeed during the winter and do quite well during the summer.”

“There are opportunities in the 300 and 400 blocks of South Franklin that have never existed before,” Tripp said.

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