It is standard that before a municipality undertakes a construction project for housing that a pro forma is done for the project that shows the cost per housing unit.
The pro forma is a financial document that shows the financial feasibility of the project. It enables the municipality to answer the question: Is the price tag per housing unit an amount the City, and the voters, would find acceptable? The Assembly does not have a pro forma for Concept C and therefore cannot answer this essential question. But the public record suggests that large but unknown subsidies will be required for housing units if the Assembly goes forward with Concept C. And it is clear that moving forward with demolition without answers to these questions is very unpopular with your constituents.
The Market Analysis proposes that of the 155 units in Concept C, 25% are destined for short-term rentals — essentially Air BnB — and that rounds off to 39 units. Yes, 25% of the units in Concept C are short-term rentals. So perhaps 116 units remain for people who live in Juneau.
And according to the Telephone Hill Place Guide, Concept D results in 36 new units plus 16 current units = 54 units. Many of us know that it is hard to credit the existing buildings with more than 13 units, so perhaps we should continue this analysis crediting Concept D with 51 units for people who live in Juneau.
It’s a reasonable assumption that the renovations required for Concept D can be offset by the sale revenue when the properties are sold. Not guaranteed of course but not an unfounded assumption. (Not even close to the magical thinking that if we demolish builders will come.)
If so, then the housing difference, for which CBJ is willing to take risky and bold action, and spend either $5.5 million or possibly $9 million… is the difference between 116 units and 51 units, or 65 additional units net, available for people in Juneau. That’s either $107,843 per unit (at 5.5 million demo/siteprep) or $176,470 (at 9 million demo/siteprep/road). Bear in mind that the Concept C units are a mix of 469-square foot studio, 728-square foot one-bed, and 947-square foot two-bed apartments, while some of Concept D are more generously sized.
Either way, a subsidy of $107,843 or $176,470 per unit seems like quite a bit of subsidy. Shame that for that much subsidy it still won’t guarantee that there will be any affordable units. In fact the Market Analysis states that these units are likely to “rent for a premium over existing housing stock.”
CBJ seems willing to admit that more subsidies may be required to make this happen, so perhaps the potential subsidies that bother me are actually small potatoes. And then CBJ also recognizes that 155 units may be an overestimate of what is possible.
The City Manager told the Assembly at the COW meeting on November 3rd that Concept C is risky but bold. Yes, it is risky. As a citizen, I believe it is unreasonably risky. I believe it is unreasonably risky that, for such a large expenditure of public funds, the Assembly is demolishing the current housing on Telephone Hill without a pro forma for Concept C as compared to one for Concept D. The pro forma for Concept C would include at a minimum the $5.5 million dollar estimate for demolition and site preparation that will be spent before a single housing unit is built. A pro forma for Concept D will not start out with that large liability. Please direct that CBJ staff provide the Assembly with a pro forma for Concept C and Concept D.
Larry Talley was born in Ketchikan, graduated from Ketchikan High School, attended the University of Alaska Fairbanks, moved to Juneau in 1977 and worked in Juneau for over 40 years as a computer programmer and bureaucrat. Now mostly retired, he spends his summers whale-watching and hiking. He is married and has three adult children living in Juneau.
