City and Borough of Juneau Assembly members unanimously agreed on a city ordinance which appropriates $700,000 — pulled from the Affordable Housing Fund — to fund a predevelopment loan for the proposed Gastineau Lodges project which, if developed, would create a 72-unit apartment building in downtown Juneau. (Clarise Larson / Juneau Empire)

City and Borough of Juneau Assembly members unanimously agreed on a city ordinance which appropriates $700,000 — pulled from the Affordable Housing Fund — to fund a predevelopment loan for the proposed Gastineau Lodges project which, if developed, would create a 72-unit apartment building in downtown Juneau. (Clarise Larson / Juneau Empire)

Downtown housing project takes step forward

Assembly agrees to predevelopment loan for 72-unit Gastineau Lodges project.

Housing downtown could be on the upswing after an Assembly action Monday night.

City and Borough of Juneau Assembly members unanimously agreed on a city ordinance which appropriates $700,000 — pulled from the Affordable Housing Fund — to fund a predevelopment loan for the proposed Gastineau Lodges project which, if developed, would create a 72-unit apartment building in downtown Juneau.

The project, which was proposed by the private development group Gastineau Lodge Apartments, LLC during the 2021 Affordable Housing Fund solicitation period, requested a predevelopment loan of $700,000 for a 72-unit apartment building in downtown Juneau, but the value of the land they want to develop on has two very different valuations and has two differing hazard zone evaluations.

On one end of the project’s value, the city assessor valued it at $134,100, on the other end, a recently provided appraisal valued it at $795,000 — meaning a more than $650,000 gap between the two assessments.

Due to the wide range between the two values, the city determined the loan would include a phased loan disbursement with benchmarks and also include private matching, and will be split into two $350,000 pre-permitting and post-permitting loans.

City manager Rorie Watt did not give his typical recommendation on whether the Assembly should adopt the ordinance but did share there could be a risk of financial loss if the developer does not get OK’d for Housing and Urban Development funding.

Steven Soenksen, Manager of Gastineau Lodge Apartments, LLC, said he thinks the city investment is secure and said the group is seeking out other ways to finance the development if HUD funding is denied.

Another issue addressed about the project was slope stability along Gastineau Avenue, which was brought into question by Assembly members in response to a recent landslide that occurred on the road in late September.

[City set to begin cleanup after landslide]

According to Juneau’s current hazard zone code adopted in 1987 and based on maps created in the 1970s, the Gastineau Lodges project is set to be located in a moderate hazard zone, which Watt said the city allows for development in. However, in more recent unadopted maps assessed in April of this year, the project is shown to be in a severe hazard area, in which dense development is not allowed by the city, according to Watt.

Watt said that makes things complicated because the new maps are not yet adopted and aren’t code, and cannot be used to restrict specific development.

“We’re fairly pretzeled up on this issue,” Watt said. “We want development, we want more housing, and we have existing development downtown, but the policy question is how much should we promote or restrict housing development downtown?”

Soenksen said though he addresses and is concerned about the hazards, he thinks the need for development in Juneau surpasses the potential risk.

“I think mitigation is a stronger case than saying ‘No, don’t go there, don’t go there,’” Soenksen said.

Now that the ordinance is OK’d, the funds will initially go toward permitting and site work prior to building, as outlined in a CBJ memo.

• Contact reporter Clarise Larson at clarise.larson@juneauempire.com or at (651)-528-1807. Follow her on Twitter @clariselarson

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