The Alaska Housing Finance Corp. board has approved a financing plan that will allow the Tlingit-Haida Regional Housing Authority to buy Fireweed Place in downtown Juneau.
The 67-unit senior apartment complex has been teetering on the brink of foreclosure and has survived this year with a $137,000 grant from the state Legislature. The building provides housing to people 55 and over.
Under a $5.27 million financing arrangement approved by the AHFC board on Wednesday, the nonprofit Senior Citizens Support Services Inc., which owns and runs Fireweed Place, would sell the building to the Tlingit-Haida Regional Housing Authority, also a nonprofit group. The deal is scheduled to be completed Jan. 17.
The AHFC board unanimously agreed to provide a $2.27 million loan to THRHA at 6.6 percent interest for 30 years, with a $3 million second mortgage at no interest. In doing so, the AHFC board agreed to absorb $2.1 million in debt.
The deal will allow the building to remain as senior housing and provides an opportunity for THRHA to tap into funding through the Native American Housing Assistance and Self-Determination Act, said Paul Kapansky, AHFC mortgage director.
The alternative was for AHFC to foreclose on the property and take ownership in nine months, he said.
Fireweed Place board members had been concerned the building would not stay as senior housing if the AHFC foreclosed.
Senior Citizens Support Services board President Thomas Dahl described the THRHA purchase as positive and said residents shouldn't notice a change. Rents and on-site management will be the same, and the Fireweed board will continue to be involved, he said.
"Our goals in this effort have been to keep Fireweed Place as a well-managed facility exclusively for seniors and to maintain local management," he said. "And we were not able to do that by ourselves because the financial pressure we were under made it impossible. ... So when the possibility surfaced for sale to Tlingit-Haida, it seemed liked a natural."
Barbra Holian, a communication officer with THRHA in Juneau, said the building will continue to operate as senior housing and no one will have to move.
"Since 1973, we've been the largest provider of affordable housing in Southeast Alaska," she said. "This is what we do. We really feel that operating this facility is within our purview and expertise and we can do a good job. I think that not only will Fireweed be happy, but the community will be happy."
The Tlingit-Haida Regional Housing Authority owns and manages 815 housing units throughout the region and has been looking for opportunities to provide more housing for Juneau's seniors for the past three years, said Executive Director Blake Kazama.
"Fireweed Place is only one piece of the puzzle," he said. "We're looking at other options, too."
AHFC board Chairwoman Jewel Jones of Anchorage said members will keep an eye on Fireweed Place.
"What a merciful solution, we hope," she said, after the decision on Wednesday. "This is good for seniors. It's something that they have desired in Juneau and we hope it will work well for you."
Fireweed Place was built in 1995 at a cost of $9.2 million. Since then, Juneau's rental market has softened and Fireweed's average occupancy has hovered at about 67 percent, contributing to financial problems, according to an AHFC report. Fireweed's board also fought to decrease electric rates and reduce city property taxes.
Today, occupancy is at 98 percent, according to Fireweed Place Manager Lorilyn Swanson.
AHFC has a $104.5 million reserve for loan losses and doesn't expect the $2.1 million Fireweed Place write-off to have much of an impact on operations, Chief Financial Officer Joe Dubler said.
Even if Fireweed Place had a 5 percent vacancy rate, it would operate at a deficit under the old financing structure, AHFC mortgage director Kapansky told AHFC board members.
Senior Citizen Support Services had a $4.2 million, 30-year loan at 6.75 percent interest with AHFC and a $2.8 million second mortgage at 1.5 percent interest. The AHFC board turned down a proposal last year from Fireweed Place to forgive $3 million of the loan.
Joanna Markell can be reached at firstname.lastname@example.org.