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Remedies for housing crunch include sewers, a bridge, trimming red tape

Posted: Tuesday, July 12, 2005

Changing Juneau's housing landscape starts with asphalt and pipe, many observers say.

Depending on their backgrounds, community leaders propose solutions ranging from building a second bridge across Gastineau Channel to extending the city sewer system - all with a view to bunching houses and condominiums more tightly.

Many city officials and developers say increasing neighborhood density is the only way to ease Juneau's housing shortage, which has pushed up prices so that many cannot afford to own their own home.

"It's the only smart and financially feasible way to solve Juneau's housing problem," Juneau Assembly member Merrill Sanford said. "It will drive land and housing prices down."

But under city zoning it can't happen unless the city extends its sewer system first. Right now, more than 60 percent of the land beyond Brotherhood Bridge and in north and west Douglas is zoned for only one home per acre because it is not connected to city sewers.

Developers can't build condominiums or apartments beyond the sewer system because on-site septic systems need space for drain fields and can't handle large waste volumes, City Engineering Director Roger Healy said.

A $33 million idea

Sanford has championed extending city sewer lines with revenues from a voter-approved 1 percent sales tax. With sewers, the city could allow 10 homes or more per acre on land that currently won't allow it, he said.

The city estimates that extending sewer lines to the lower Mendenhall Valley, Mendenhall Peninsula and north Douglas would cost $32.9 million. Counting state grants, state loans and residents' contributions, the city would need $15 million to $26 million to complete the project.

The Juneau Chamber of Commerce has urged the city to make a sewer extension to Peterson Hill a high priority. Peterson Hill encompasses 500 acres between the Mendenhall River and Auke Lake, and is owned by the city and the University of Alaska Southeast.

Community Development Director Dale Pernula said Peterson Hill is an ideal place to develop different types of housing because it is near city buses and the university.

But Healy said it would take about three years to extend sewer lines to Peterson Hill, if the city can secure the funding.

Healy said the city prefers to make smaller sewer extensions every 18 to 24 months rather than a big one.

"We don't want to overheat the market," Healy said.

The city takes it slowly because some neighborhoods may resist city sewer, Healy said.

"It is a community goal to build affordable housing but changes in a neighborhood, especially increasing the density, are sometimes met with resistance," Healy said.

People often oppose development because it can mean their neighborhoods aren't as quiet and tranquil as they were, he said.

The land bank

Developers and the Juneau Chamber of Commerce want more land put on the market.

"Have the city sell some land," said Timothy Miller, general manager of Miller Construction. "All the good land has been developed. Right now, a 20,000-square-foot lot costs about $100,000. It should be cheaper than that.

"All that is available is wetlands. It costs too much to convert it into usable property."

The city has the most land with growth potential, said Land and Resource Manager Steve Gilbertson.

"But before they can be developed, the city needs to build roads and utilities," Gilbertson said. "Selling land doesn't always guarantee it will get developed or permitted, but it certainly provides opportunities."

Mayor Bruce Botelho said the city needs to be cautious in how much land it releases at one time.

"If the city floods the market with city land, we are competing with private developers. We will create tension in the community," Botelho said.

"The land the city has is for future generations," Botelho said. "We don't want to dispose of it lightly."

Gilbertson said the city could help lower development costs by working with developers and nonprofit organizations such as Tlingit-Haida Regional Housing Authority.

"They can identify the city land they are interested in, develop a project and get permits," Gilbertson said.

Jeff DeSmet, president of the Southeast Alaska Building Industry Association and a 30-year general contractor, said the city should relax its subdivision standards.

The city requires developers to build closed drainage, sidewalks, underground utilities, streetlights, paved roads, and curbs and gutters in subdivisions. DeSmet said the requirements make subdivision development too costly.

"If people want a less expensive home with open drainage and no sidewalks, they should be allowed to do so," DeSmet said.

Trimming red tape

Developers have suggested that the city streamline the permitting process, which officials and contractors say is drawn out because regulations are confused and scattered through the zoning code.

Richard Peterson, president and chief executive officer of Lowpete Construction, said permitting usually costs 10 percent of a project.

"Each subdivision is different. It can cost $3,000 or $4,000 per lot just for permits to develop land," Peterson said. "You still need permits to build houses on the land."

Community Development Director Pernula has asked planners to streamline the land-use code. All the amendments will be presented to the Planning Commission and considered by the Assembly.

Botelho expects the city to finish revising the code next year.

Building a second bridge across Gastineau Channel is the key to opening up new areas of Douglas Island for housing, city officials said.

The city owns about 10,000 acres on Douglas. Most of the land has no city utilities or access.

"A lot of relatively flat and well-drained land is located on west Douglas between Outer Point and Point Hilda," Gilbertson said.

Pernula said the city has been working with the state to identify funding to complete the environmental study for a second crossing.

"The existing bridge is heavily used," said Community Development Director Pernula. "A lot of traffic can create a bottleneck. Creating a second access can provide better transportation" between Douglas and Juneau.

Political will

City officials acknowledge that housing has become out of reach for many people of moderate or lower incomes.

They are tackling the issue by providing opportunities for higher-end housing.

The city is planning to subdivide 52 acres at Lena Point to create 48 lots. City Assessor Jim Canary estimated the cheapest lot would sell for at least $75,000.

The city also is working on a cottage housing ordinance - another concept not directed at low-income families. It would allow developers to build a group of small, detached houses surrounding a landscaped courtyard with detached parking.

City Planner Peter Freer, who has been working on the ordinance, said cottage housing wouldn't be the cheapest housing on the market but its small homes would fill a niche.

"The 2000 Census showed 58 percent of households in Juneau have one or two people," Freer said. "Cottage housing would provide another option on the market."

"We need housing diversity," Mayor Botelho said. "People will move up and free up more housing in the community."

Cathy Johnson, a loan broker, said any construction the city can spur will help provide more housing.

"People who live in condos want to move into attached homes (duplexes). People who live in attached homes want to move into single-family homes. People who live in single-family homes want to move into bigger and newer homes," Johnson said. "If the economy keeps growing like this, the market won't bubble."

But Sara Chambers, administrator of the nonprofit apartment rental agency Housing First, said the city's focus is wrong.

"The crunch is on lower- and middle-income people," Chambers said. "The city is assuming that everyone is going to spend more and more money on homes."

Chambers said the city could put money into housing solutions, and drop other expensive proposals.

"If we are not paying for an extra swimming pool or a grand capitol building, we can actually provide basic needs of the residents: food, clothing and shelter," Chambers said.

Canary, the city assessor who also works as a real estate appraiser throughout Southeast Alaska, said he expects Juneau's housing price will continue escalating. He said his office receives five to 10 inquiries every day for sales of homes and vacant lots.

"People who come from California have told me that it has been like this in California for the past 30 years," Canary said. "Normally the real estate market goes up and down. You will have a high and a dip. Then it will go up again and normally goes up higher."

Canary said he doesn't see Juneau's market crash even if the capital is moved from Juneau.

"Juneau has other things to offer," he said. "The housing price would go down for a while but it would always rebound again."

• I-Chun Che can be reached at ichun.che@juneauempire.com.



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