It was only a few days ago that Rich Petersen, president and CEO of Lowpete Construction, decided that he wanted to enter a lottery for lots in Juneau’s newest neighborhood Pederson Hill.
But by the end of Tuesday night, the winners of all six available lots had gone either to Petersen himself, his company, employees or people who had already made a tentative agreement to have Lowpete build a home on their lot.
“The prices are a little high,” Petersen, who received first pick in the lottery by chance, said in an interview. “With the price of these lots, we can’t build a three-bedroom home and keep it under $400,000.”
There were a total for 14 entrants for the six lots, valued at a total of $815,000 in total, according to a release from the city.
Petersen said he had been debating whether to enter the lottery but considering the lack of available lots currently available in Juneau, he and his company decided last minute to enter. He’s still unsure of next week’s sale, where lots will be sold to the highest bidder.
On Dec. 17, the city will sell the remaining 11 lots. But those lots will be sold through a competitive bid, which could see them sold for higher than the asking price.
“If we have to pay the minimum price, it’s kind of borderline whether it’s worth it,” Petersen said, explaining that even at the asking price he wasn’t sure it would be profitable.
With the Peterson Hill subdivision, the city wanted to try something new. Instead of selling a large piece of land and letting developers build the roads and other infrastructure, the city built those things and designated the size of the lots to eventually be sold on the private market.
City officials had hoped to keep the price of homes in the new subdivision low by providing the infrastructure and making the lost sizes smaller than average. But city code says that lots must be sold at fair market value. When the lots were appraised in September, the prices came back higher than hoped.
In 2016 when the Pederson Hill project was first taking shape, Lands Manager Greg Chaney told the Empire he hoped the lots would sell for around $80,000. However, the appraisal in September valued the lots at $120,000-148,000.
“The appraisals came in higher than I had expected, but that’s just a reflection of the market,” Chaney told the Empire Tuesday. “In general, there just aren’t a large number of single family lots on the market right now.”
City Housing Officer Scott Ciambor told the Empire that tracking down the exact number of lots properly zoned for single family housing was “a very hard data piece to come up with.” Many lots are privately owned and are not inventoried in city data, he said.
When the city started planning the Pederson Hill project, many developers in the community criticized the plan and said they felt the city was overstepping its bounds by getting involved with what should be private sector activity. City officials, however, felt that using city resources to try and provide affordable housing was worth pursuing. The City Assembly voted unanimously for the project in 2017.
Construction of the infrastructure fell behind schedule in 2018 and the costs were higher than the city expected. In 2018 the Empire reported the cost of the project was around $9 million.
Chaney couldn’t say exactly how much the city had spent thus far, saying the details are still being worked out with the contractor.
“It’s way more than the value of these properties. If you add all these properties up, we’ve spent more than that,” Chaney said. “This is the entry to a very large new neighborhood. There’s 86 lots, so once we build all those and sell all those, we’ll hopefully be a little ahead of breaking even.”
When that might be is not yet clear. The city still needs to sell the 11 remaining lots and then will have to wait and see how quickly the new homes sell.
Petersen says he hopes to begin construction next spring, but it could be a multi-year process to build on all the lots.
“We try to find buyers before we build,” he said.
• Contact reporter Peter Segall at 523-2228 or firstname.lastname@example.org.