The Assembly should reconsider its June 9, 2025, decision to evict all current residents by Oct. 1 and then pay $9 million to deconstruct and remove current housing on Telephone Hill for the following reasons:
1. This is a very risky financial undertaking. Leland Consultant Group, which prepared the Assembly’s “Market Analysis, Feasibility Analysis and Development Strategy writes at page 40:
“To attract a developer, the CBJ may need to provide a subsidy even for market rate apartments, unless the developer is confident that they can achieve rents higher than those modeled … .”
“Despite the assumption that market rent would be significantly higher than is typical in the Juneau market there is still quite a large feasibility gap in most scenarios … which could only pencil out by offsetting costs with short term rentals.”
Leland highlighted that: “there is no scenario that breaks even given Juneau’s Area Median Income;” and “There may be political challenges to contributing funding for a market rate project that includes short term rentals.”
2. The CBJ’s risk of loss of all or some of the $9 million is exacerbated: (i) paying to deconstruct and remove the current housing before doing the homework required to know if the site is large enough and the rock base competent enough to accommodate midrise buildings and if so how many; (ii) proceeding without being able to reasonably estimate whether developers will bid for the resulting land in a sufficient amount to offset the CBJ’s $9 million deconstruction and removal costs; and (iii) proceeding to evict current households on Oct. 1 without knowing whether the $9 million will be needed to offset potential losses to the CBJ budget caused by passage of the tax cap and food exemption ballot measures on Election Day (Oct. 7).
It is unclear why the CBJ would withhold grant money from various organizations like KTOO, Augustus Brown Pool, Eaglecrest, and others until the risk of the $9-$12 million budget impact from passage of the ballot measures is known but not delay proceeding with the Oct. 1 eviction of the Telephone Hill residents and committing $9 million to deconstruct Telephone Hill for the same reason.
3. Postponing removal of 10 households into Juneau’s tight housing market until these unknowns become known would allow the Assembly and the public:
• to learn the results of voting on the two measures that will be on the October ballot and the impact, if any, that they, and potential federal recissions, will have on CBJ finances going forward;
• to have engineering work completed that is needed to know whether the site is sufficiently buildable to accommodate multi-story buildings, and if so, how many; and
• to use the information gained from the engineering work to be able to reasonably estimate the value of the Telephone Hill properties and expected receipts and future property taxes from their sale.
4. Study of available information indicates that; (a) only 1.1 acres on the top of Telephone Hill is economically buildable due to the steep slopes and required setbacks; (b) the competency of the Hill’s bedrock to support multi-story buildings is not known; (c) how close to the ground above the wet and dripping Overstreet Underpass on which multi-story buildings can be safely built is not known.
5. This means that neither the Assembly nor the public currently know whether Telephone Hill can support the weight of a multi-story building or, if so, how tall such a building can be safely built, or how many such buildings can be safely built on 1.1 acres, or the costs associated with the bottlenecks caused by having such a small area in which to work. So, we do not have a workable idea of how many people can live there compared to the 19 people currently living there on five of the properties.
6. Thus, at the present time neither the Assembly, the public, nor a potential Telephone Hill developer can predict the costs of construction. What future costs might be for a developer is further complicated by the newly imposed tariffs on steel and other construction materials. These continuing uncertainties make cost overruns highly likely. Until sufficient homework has been done to determine what can be constructed there and reasonably estimate the costs of construction and developers’ return on investment no one can comfortably predict the price range for a condo, apartment, or a hotel room.
7. Until it knows what potential developers can be expected to pay, the Assembly and the public will not have a reasonable estimate of how much money CBJ will receive in return for the expenditure of $9 million of CBJ funds to deconstruct and remove existing houses. (This deconstruction and removal includes the disposal of hazardous materials (e.g., asbestos and lead) from the houses and move tons of rock and dirt from one end of the hill to the other to “flatten out” the hill for construction).
8. These unknowns are further complicated by not knowing what federal grants for education, Mendenhall River flooding, or other issues of primary importance to the CBJ might be withheld.
9. Moving forward with demolition of the houses on Telephone Hill which will almost certainly contain asbestos and other hazardous materials, and then seeking CERCLA or other federal permits or funds to remove such materials or build new buildings could be considered “anticipatory destruction” under 36 C.F.R. § 800.9(c)(1):
Agency responsibility. Section 110(k) of the act prohibits a Federal agency from granting a loan, loan guarantee, permit, license or other assistance to an applicant who, with intent to avoid the requirements of section 106, has intentionally significantly adversely affected a historic property to which the grant would relate, or having legal power to prevent it, has allowed such significant adverse effect to occur, unless the agency, after consultation with the Council, determines that circumstances justify granting such assistance despite the adverse effect created or permitted by the applicant.
10. The public should be informed of the foregoing and have an opportunity to comment on whether it wishes the CBJ to pay $9 million for the deconstruction and removal of existing homes on Telephone Hill starting Oct. 1 before the risks associated with the “unknowns” described above are known and their impact on the CBJ budget has been evaluated.
11. The public has never had the opportunity to comment on the option of simply selling the existing homes on Telephone Hill (which have been occupied and maintained for the last 38 years since the State took ownership) and putting the funds received into the CBJ Treasury. Public comment and a potential vote on this option should be considered by the Assembly after the work described above has been completed.
Jim Clark is a local attorney who has lived in Juneau since 1973 and has been active in Juneau civic affairs since that time.
