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Home builders say over-regulation in Anchorage is slowing growth

By Kate McPherson 8:31 AM March 3, 2015
ANCHORAGE –

City planning officials say Anchorage is not on track to meet the housing demand over the coming decades.

“Looking at the building permits issued in 2013 and 2014 they are not meeting the benchmarks,” said Jerry Weaver, director of Community Development with the municipality.

A report prepared for the municipality in 2012 says Anchorage needs 18,000 new housing units by 2030 — that’s more than 900 new units a year. In 2013, 526 new housing units, including single-family, duplex and multi-family, were built, according to city data. Last year, 768 new housing units were built.

“At a four percent vacancy rate we should be seeing a lot of multi-family construction, but we don’t see that,” said Weaver, who adds that something needs to be done to “jump-start the construction of housing” and he and his team in the Planning Division are trying a number of methods to do that — including encouraging higher-density development.

But some builders in Anchorage aren’t feeling the encouragement.

“It’s so expensive to build here in Anchorage, in particular multi-family housing,” said property developer Shaun Debenham. “There hasn’t been anybody building because it just doesn’t pencil out, it doesn’t make sense, you can’t make money doing it.”

Debenham Properties is the first company in a decade to build an apartment complex that isn’t subsidized by the government. Construction crews are still working on the second phase of the project, near Raspberry Road and Northwood Street. Debenham, whose father started the company in the ’60s, says he won’t be building another apartment complex in the near future — he says it’s too expensive to comply with the city’s codes and regulations.

Debenham says the rewrite of the city’s land use code, Title 21, has done nothing to encourage him to build housing.

“The problem is that the new Title 21 regulations limit density and limits height on buildings and therefore it’s going in the opposite direction of where we want to go,” Debenham said.

There’s some land that Debenham owns close by to the new apartments that could’ve been used for more housing, but it will be used for commercial space instead. He’s petitioning the Anchorage Assembly’s Title 21 subcommittee to change some of the regulations to make building housing more attractive.

Andre Spinelli, of Spinell Homes, says his company builds about 80 homes a year. He says it used to be 180, but several factors, including regulations under the new Title 21, limits his business.

“The municipality makes it so tough to get a residential development or building project off the ground that it opens the builder up to a lot of risk,” said Spinelli, adding that the cost of obtaining a residential building permit in the Mat-Su Valley is about $1,500 compared to $10,000 in Anchorage.

Spinelli says the process of getting building approvals from the city is fraught with delays.

“Which then further restricts the supply of new homes, which then allows people selling existing homes on the market to raise their prices because the demand is so high and there is no supply,” Spinelli said.

Weaver acknowledges the high cost of building in Anchorage, which he says is due to the cost of land, materials and labor, as well as high building standards.

“Simply because of our conditions, we are in a high seismic part of the world, probably we have some of the highest seismic standards in our building code,” Weaver said. “We are doing what we can to make sure the regulations aren’t slowing anything down.”

The Planning Division will present a new land use map to Planning and Zoning in the next couple of months. One of the focuses is finding more land where multi-family housing can be built. Weaver says his department must consider the character of established neighborhoods, and that’s why height restrictions are in place.

But he singles out Spenard, the U-Med district, Downtown and Fairview as areas where the city would like to see multi-family housing development.

“We haven’t had any major residential development in the downtown for a very long time, we haven’t focused on how to make that happen,” Weaver said. “That area needs proximity to a grocery facility to make that residential happen and that’s just not there — so in our discussions with the bigger developers we’ve talked about that, I’ve suggested to Safeway Carrs that they look at that.”

He says the grocery chain hasn’t indicated that they are interested in a new store Downtown.

“The Railroad has some plans for residential on some of their properties that abut along Third, Second Ave.; there is a lot of potential,” Weaver said.

Weaver says he’s also putting a group of people together to talk about tax incentives to spur residential development.

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