It seems Juneau may soon have an opportunity to move beyond the talking and hand-wringing phases of addressing its affordable housing problem, and take concrete steps toward new homes in the capital city.
Part of the reason for this is House Bill 264’s recent passage in the Legislature’s lower chamber with wide support. This measure — if it clears the Senate and is signed into law by Gov. Sean Parnell — would allow cities to change the timing in how they collect taxes on newly subdivided parcels of land.
Currently, if a large plot goes through the process of being subdivided, its value in the eyes of both the real estate market and the tax assessor’s office goes up — often way up, because it can now legally hold more homes. As state law is written now, the prospective developer is on the hook for that increase in taxes at the start of the next year, even though improving the land, building houses or commercial buildings and selling it is a process that can take much longer.
Under HB 264 — championed by Republican Juneau Rep. Cathy Muñoz and House Speaker Mike Chenault, R-Nikiski, and later co-sponsored by Juneau’s Democratic Rep. Beth Kerttula — the would-be builder can put off that increase in taxes while his or her subdivision is being built and the homes therein are sold. Here, “put off” doesn’t mean “not pay.” The developer still must keep current with paying the levy at the previously assessed value, and must make good on the difference when the property is sold. The difference is that, instead of being liable for the increase as soon as the property is reassessed, the developer can make those payments as the smaller pieces of land are sold. This breaks the payment up over the number of parcels the property is subdivided into, and defers them until they are sold — presumably when the builder is in a much better cash position to make them. A five-year limit on deferrals helps prevent this from becoming a tax haven for land speculators instead of the encouragement for building housing and commercial space Juneau needs.
Finally, the bill leaves the decision up to individual municipalities as to whether or not to create this incentive to build. If a city believes its coffers will suffer too much, or it doesn’t need to boost housing construction, then that town can choose to opt out. For a city and borough like Juneau, however, it may just give it a powerful tool to spur much-needed housing and commercial construction.
“This helps us have more development in Juneau, and we need it — we need more housing,” Kerttula said after the bill passed the house, and she’s right.
The other development that may lead to new housing took place at City Hall on Tuesday, when the Juneau Planning Commission approved new building height and housing density requirements in certain areas of town. Under that plan, buildings in three zoning areas — General Commercial, Light Commercial and Multi-Use 2 — could add many more housing units per acre, and could grow by one story to help accommodate that growth. Under the ordinance, General Commercial zones could hold 50 residential units per acre, up from the current 18, while Light Commercial zones would max out at 30 units, also up from 18 (Multi Use 2 zones would also see an increase in the maximum number of units they can hold, 80 instead of the current 60).
One intent of the plan is to make construction of new apartments and condominiums in those areas commercially viable. City planner Ben Lyman on Tuesday described the proposed maximum of 30 units an acre in Light Commercial areas as a minimum level needed to spur development.
“Right now residential development isn’t happening in our commercial zones because 18 units per acre just doesn’t work financially,” he said, based on his discussions with architects, developers, engineers and so on. “But at 30 units per acre, something changes. It allows them to build unsubsidized, affordable housing in Juneau.” If this proposal seems like a big change, that’s because it is. Planning Commission Vice Chairman Dennis Watson praised the plan Tuesday, calling it one of the most progressive in some time in Juneau.
Let’s hope it proves to be, because progress is needed when it comes to affordable housing in the capital city. At the end of the first half of 2011, the average cost of a new home in Juneau was $321,391, according to the Juneau Economic Development Council. The Census Bureau reported national average home price in June of 2011 was $273,100. Juneau’s rental vacancy rate in 2011 stood at 3.2 percent, compared to a national rate of 9.2 percent (again, according to the JEDC). And all of those numbers come at a time of flat population growth in Juneau, and doesn’t account for the growth the capital city will need in the coming years.
The housing issue in Juneau has been a problem sparking much discussion and little action for a long time. However, the city and state this week took practical and meaningful action to help the problem. The housing height and density ordinance will soon be in front of the City Assembly, and it’s likely, given Sen. Dennis Egan’s supportive comments about HB 264’s chances in the Senate, the tax deferral plan will be there as well. The Assembly needs to support these practical ways to alleviate Juneau’s housing crunch.
• Ward is deputy managing editor of the Juneau Empire. The views he expresses are his alone, and do not necessarily reflect the views of the Empire’s editorial board.