Jul. 20—New breaks on both municipal taxes and certain design rules for large multifamily projects are helping set the stage for a big increase in apartment construction in Anchorage, developers and municipal officials say.
It’s an early sign of progress in efforts by the mayor’s office and the Anchorage Assembly to combat a lack of housing construction that for years has been blamed for the city’s sharply rising rent and home prices, they say.
The municipality permitted 146 residential units in six months this year, for projects with four or more units, according to a recent update from municipal planners.
That’s a sharp increase from all of last year, when just 79 units were permitted in that category.
The growth is helping Anchorage boost overall residential construction, which also includes single-family homes, triplexes and duplexes, city officials say.
Projects on the books include a townhome complex in the Sand Lake neighborhood and a Cook Inlet Housing Authority project in Midtown.
“We’ve been in sort of a drought in housing production for several years,” said Nolan Klouda, policy director for Mayor Suzanne LaFrance.
Facing high costs and other challenges in residential construction, developers in recent years have tended to build high-end luxury homes or federally subsided housing, he said.
“So a lot of the housing we’re seeing getting built fills that space in the middle” that many people can afford, he said.
The new tax break and moratorium will enable developer Shaun Debenham to build the Raspberry Townhomes, a $19 million, 58-unit project in Sand Lake at Northwood Street and Raspberry Road, he said.
“The way I look at it, these two tools enabled a project that didn’t pencil, to now pencil, and be able to move forward,” he said.
‘Newest and smartest’ apartments
The Anchorage Assembly over the last three years has taken several steps to loosen development rules to promote more housing construction. LaFrance has set a citywide goal to see 1,000 new and rehabilitated residential units built annually over the next decade.
The increase in apartment permits has helped overall residential permitting that includes single-family homes and other categories.
As of July, 263 residential units had been permitted, compared to 300 all of last year, Klouda said.
To get housing built, the Assembly in February approved a three-year pause on many city design rules for large multifamily housing.
In April, it approved a new ordinance providing a 20-year tax break for projects with eight or more units, exempting the building but not the land.
Many of the efforts to loosen the rules have prompted criticism from some community councils surrounding concerns that neighborhoods will lose much of their character as more houses, buildings and traffic are squeezed into smaller areas.
The Rabbit Creek Community Council opposed the design moratorium early this year. But it called the tax break “a positive step in the right direction” that can support new construction, in a letter to the Anchorage Assembly.
Debenham, the developer, estimated that only about 100 apartments have been built in Anchorage in the last 20 years that were market-rate, meaning they did not receive subsidies for construction.
He was responsible for building about half of those at The Residences at Northwood, a complex completed nearly a decade ago, he said.
The Raspberry Townhomes, with four unique buildings, will be an extension of that development.
He said the townhomes will be designed to be attractive even though they won’t need to meet all previous design standards, he said.
“There’s a built-in incentive there that says you’ve got to build these nice if you want to get a return,” he said.
The townhomes will be available for rent in 2027, he said. They’ll come with heated garages, smart thermostats, lights and door locks, along with alternating rooflines, window sizes and facades to add visual interest, said Debenham.
“They will be the newest and the smartest (apartments),” he said of the Raspberry Townhomes.
One-bedroom units might rent for a little more than $2,000 monthly, while the two-bedroom units might rent in the mid-$2,000 range, Debenham said.
Debenham most recently completed the Block 96 Flats apartments in downtown, a public-private effort that included investment by the Anchorage Community Development Authority, a municipal entity.
‘More leeway’ on design
Large multifamily projects that don’t receive subsidies have not often been built in Anchorage in part because of the same factors pressuring all construction, including high prices for materials and labor driven by Alaska’s remoteness, developers say.
Meanwhile, the city over the years has added more design requirements that often made multifamily construction particularly expensive, they said.
“People talk about death by 1,000 cuts, and that’s really what kind of transpired and happened to our building community, especially when it comes to apartments,” Debenham said. “So we’ve built a lot of high-end homes in Anchorage over the last 15 years and we’ve built a lot of subsidized housing, but what we haven’t really built is that market that’s in between.”
He said he feels like there’s a new level of cooperation between builders, city leaders and the planning department that’s helping projects move ahead.
“Adding large amounts of housing will put people to work, and we won’t have this drag of ’80s-style apartments and houses,” he said.
Klouda, with the LaFrance administration, said the cost of building apartments in Anchorage far outpaces their value once they’re built.
The tax break helps close that gap, he said. The design moratorium gives builders “more leeway to determine the aesthetics” of their project, he said.
Klouda said the LaFrance administration is also working on a proposed ordinance that, if passed, would provide a 10-year tax abatement if developers rehabilitate residential properties built before 1995 that are on the city’s list of about 180 vacant and abandoned properties. Those properties range from single-family housing to apartments.
Klouda said the efforts to get more housing built will take time to play out.
“We know that there’s a ramp up going on and we like the signs that we’re seeing right now,” Klouda said. “But we’re not naive to the fact that policy changes take a little bit of time to really take their full effect.”
Tyler Robinson, with Cook Inlet Housing Authority, said the design moratorium allowed the developer to break ground this summer on its housing development at the Baxter and Tudor roads intersection, rather than next summer.
The changes paused a specific, design-review process for multifamily projects, saving the authority at least four to six months and $50,000, he said.
Now, the project can be completed early next year, he said.
The $7.8 million Baxter housing project will provide 24 units in a first phase, mixing affordable and market-rate housing.
The market-rate units are currently expected to rent at $1,400 monthly for a two-bedroom and $1,700 per month for a three-bedroom, though that could change, he said. The affordable-rate rents would start at $1,135 for two-bedrooms, and $1,250 for three bedrooms.
Robinson said that even with the design moratorium, builders must still follow hundreds of pages of criteria that have been added to the city code in recent decades.
Those provide standards for things such as landscaping, structure height and setbacks, and other areas. He said projects continue to undergo full reviews in several areas, including for fire, building safety, planning and traffic requirements.
He said the requirements that were paused often led to stalled projects and reduced construction, even though Anchorage plans called for more multifamily housing.
“We want and need those housing units, and so the city is willing to try and see if some of this can help to get more housing produced,” he said.