With Mayor Berkowitz now firmly seated on the 8th floor of Anchorage’s City Hall, there is a new opportunity to solve Anchorage’s housing crisis. Listed as Priority Three on his transition report, the lack of housing in Alaska’s largest city, however, needs more than another committee or a ‘change in culture’. Specific changes need to be made in order to make housing more affordable and available to the city identified as ‘Alaska’s Gateway to the Arctic’. The city doesn’t need more reports and committees when in June, Anchorage’s single family permits fell to a five year low of 140, and duplex permits fell 50% below last year’s 54 units. Whether it’s a downsizing baby boomer, a millennial first time home buyer or a ‘generation Y’ buyer with a growing family, the most sought after housing type is still a single family home and Anchorage continues to lose out to the Valley when it comes to single home purchases.
One good idea that has come out of the transition report is to create a system for better coordination with developers between AWWU, CEA, ML&P and MOA. Currently, there is no coordination for the extension of roads and public water and sewer which is why you can see miles of improved roads adjacent to undeveloped parcels of land. Any extensions that you do see must be paid for solely by the developer. However, there is still an MOA ordinance on the books that would allow the MOA to participate in the cost of the extension of collector roads and water/sewer with the private developer if it opened up new land for development and created new tax revenue. Undeveloped tracts of land have marginal tax revenues, while lots fully developed are taxed between $1,500 and $2,500 per year, and a new home has taxable value of $5,000 to $10,000, depending on its assessed value. This ordinance was abandoned during the real estate recession of the late 1980’s when the city had thousands of foreclosed homes and half the population of our now 300,000 plus. It is time for the assembly and mayor to reconsider its role in development, not with words and committees, but financial participation.
In May, the average sales price of an Anchorage home was $390,000, the highest monthly value in ten years. Twenty to twenty-five percent of that cost is in the value of its lot. Seventy-five percent of that value is in the extension of roads and utilities or approximately $75,000. With only 33% participation or reimbursement by the MOA, the cost of housing could be reduced by $25,000. No committee report or change in culture can come close to giving such a direct benefit to local home buyers.
Other ideas in the mayor’s report include reducing the uncertainty of development and minimizing delays through a more expedited process for permitting and rezoning. Finalizing Title 21 would certainly help in reducing the uncertainty both residential and commercial developers face today. The current version of Title 21 had its origins back when housing was at its zenith in the mid 2000’s and the MOA hired a consultant from Colorado to rewrite our land use regulations. Since then, it has had hundreds of hours of committee meetings and rewriting. Mayor Berkowitz and the Anchorage Assembly should finalize the plan, for better or worse. Uncertainty and delays cost our city almost as much as a water pipe.