Housing puzzle

City officials struggle to find solution to Juneau's high residential costs

Posted: Sunday, December 20, 2009

Higher wages, stagnant housing prices and record low interest rates have combined to make housing in Alaska the most affordable it's been in 10 years, according to a recent report from the Alaska Department of Labor and Workforce Development.

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Michael Penn / Juneau Empire
Michael Penn / Juneau Empire

Juneau, however, is still one of the least affordable areas in the state. The long-standing, complex problem has to do with available land, population density in developed areas, availability of infrastructure such as sewer, water and roads, wages, and the overall cost of development, say those involved with the issue. While the city has taken some steps forward, it's still quite a distance from solving the problem, and ideas about how to get there vary widely.

A face on the problem

Carrie Walker and Michelle Akers know firsthand the struggle of finding housing in Juneau.

After moving back to Juneau with her 7-year-old son in January, Carrie Walker, 25, lived with her mother, friends and her boyfriend's mother while looking for an apartment to rent - but she had no luck. And even after gaining approval for a loan to buy a home, she said it was tough to know how to proceed.

"Getting a down payment together, that was a struggle for me," Walker said. "Having to pay for regular living expenses, down payment can range pretty high."

Michelle Akers, a 39-year-old bartender, started looking for a home more than four years ago.

"It was really hard. I couldn't find anything," she said.

She had lived in a one-bedroom apartment since moving to Juneau in 1999. "I was renting for ten years and just was ready, but feeling like it was just hopeless, I would never be able to afford it," she said.

Both women did end up finding a home, though, with help from Housing First's Home Opportunity Program, which provides income-qualified homebuyers with zero-interest loans for down payment, closing and other costs. Walker and her son got a place at the end of the summer; Akers moved in toher place the week afterThanksgiving.

"It feels amazing," Akers said. "It just completely changed my perspective ... I don't think I would have been able to afford this on my own. ... We need more programs like that, or building affordable housing. It's just too expensive for a single person or even a single family."

Walker said she has lived in low-income housing before. But low-income housing frequently takes 30 percent of a renter's income no matter what that income is, so she's grateful that if she makes more money in the future, it won't result in higher rent.

She said the move also positively affected son, Patrick Iler. "He's definitely more stable feeling," she said. "He's like, 'Wow.' He wants his friends to come over. He feels more like it's his."

How expensive is Juneau?

It took the average wage earner 1.71 salaries to buy the average house at the average interest rate in Juneau in the first half of 2009, according to a December Department of Labor report by economist Caroline Schultz. Though Juneau is the second least affordable area in the state, behind only Bethel at 1.74 and tied with Kodiak Island, its most current affordability statistics are still an improvement from previous years.

In the second half of 2006, it took the average wage earner 1.94 salaries to buy a house in Juneau. Juneau's five-year average is 1.85.

In Alaska as a whole, the affordability index is currently at 1.36.

So why the difference?

Root causes

"It's a very complex issue," said Juneau Community Development director Dale Pernula of affordable housing. "Juneau's fairly isolated; we don't have a lot of land. There are a lot of steep slopes, wetlands, muskeg - and it's spread out quite a bit, making housing an issue. ... If it was simple, we'd come to a simple solution, but it's not that simple."

Land manager Heather Marlow said lack of infrastructure has been "the biggest holdup to affordable low-income development."

"We need to start building that infrastructure with development," she said. "If it (sewer) is self contained, you need a larger lot to address your septic field. ... The thought is for areas close to the borough, trying to go for smaller lot sizes to gain efficiencies in service."

Lots that require their own sewer treatment sometimes need to be as much as three times larger, she said.

Part of the effort to gain "efficiencies in service" also has consisted of rezoning several areas served by sewers, roads and water to allow for higher population density. A recent example is about 100 acres on North Douglas.

The thought is that if more units are built on a portion of land, the cost per unit will be smaller.


And then there's Juneau's land itself.

The city has about 23,000 acres of public land, including the Juneau School District, the marinas, city hall, public parks and vacant land, some of which can be developed and some that cannot, Marlow said.

"Municipal land holdings are the community's largest asset," she said. "We own a lot of land. ... Our responsibility is to manage that land for the highest investment return for the public, which is usually selling the land at market value. Market value for raw land is high in Juneau due to availability."

Selling at market value, however, can have a detrimental effect on affordable housing efforts. A recent example is an effort by school district's Architecture, Auto, Construction and Engineering Academy to build affordable housing, which several said could not be made affordable in large part because of the cost of thecity-owned land.

The city worked out a deal so the school district doesn't have to pay for the land until it sells the property and the home the students build.

Deputy City Manager Kim Kiefer said she was under the impression that because of the costs of developing that particular piece of property, the home wouldn't have been affordable even if the land had been donated or sold at adiscounted rate.

She also said if someone proposed a partnership with the city to build affordable housing on city-owned land, the city would consider either donating the land or decreasing its cost.

"We would have to look and see what the payback would be, how many units ... when you look at city property, there are not a lot we would say are great places for affordable housing to happen," she said. "They need water and sewer and to be on the bus line."

City officials said much of the city's land isn't necessarily developable, and even if it is, the costs of extending infrastructure are often too high to develop affordable housing.

Juneau Economic Development Council Housing Coordinator Scott Ciambor said this fact means infill is important.

"(Infill) will allow developers to find smaller parcels of land and create more units," he said.

The future

"There is a lot of housing data out there and available for our community, but it isn't very specific. We have the number of units permitted, but we need to dig deeper and find out how many of those are in the affordable range and what's really lacking," Ciambor said.

Ciambor said Juneau also needs a system in place to track housing need, resources available and year-to-year statistics to gauge how Juneau is doing.

Ciambor said a local pool of money may be one solution the problem. Even if Juneau used all the state and federal resources available to it, it still may not be enough.

That could include land donation, private owners developing multi-family housing and more government action.

Kiefer also said she and Marlow have spoken about the possibility of setting up a fund so that the city can build roads, water and sewer to inaccessible city property that could be used for affordable housing.

Kiefer said the affordable housing commission has discussed setting up a housing trust for money that could be used for loans and grants for those building affordable housing.

Though the city's looming budget deficit means it might be an empty fund for a little while, it would open up the possibility of federal and state funding, Kiefer said.

Both matters would go to the Juneau Assembly for approval.

"All the pieces are there. It will be a matter of fine tuning it and organizing it," Ciambor said of affordable housing in general.

In the meantime, he said, "the spectrum in Juneau includes a lot of people - even folks who make $50,000 to $60,000 a year - who are paying too much."

• Contact reporter Mary Catharine Martin at 523-2276 or maryc.martin@juneauempire.com.

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