Last summer, a sign by a construction site on Glacier Highway advertised a development called Ridgeview, with apartments for rent coming in fall of 2023.
For Juneau resident Carissa Armstrong, who has two children, it was a glimmer of hope for more rental options in Alaska’s capital city.
“I make enough money to be able to kind of afford your standard two bedroom in Juneau, but there’s just nothing available,” she said.
By winter, the “apartments for rent” text on the sign was covered up. An email sent to those who signed up for the Ridgeview waitlist said the first 24 units would be available for purchase at market price.
“I was like, ‘Well, that’s out of the question,’” Armstrong said. “I don’t have $150,000 to $200,000 to go buy a flat.”
She would have needed much more than that. On Monday, Ridgeview announced online that one-bedroom units would start at $375,000 and two-bedroom units would start at $495,000.
Those prices surprised many Juneau residents because Ridgeview’s developer is borrowing $1.2 million from the Juneau Affordable Housing Fund.
City leaders defend their decision to approve the loan but say they want to adhere more closely to affordability requirements in the future.
Assembly to discuss future housing fund loan conditions
The City and Borough of Juneau created an Affordable Housing Commission in 2007 to advise city leaders on how to create more affordable housing. The city established the affordable housing fund a few years later with federal and state funds. Early recipients included programs that help Juneauites build accessory dwelling units and make down payments on mobile homes. In 2017 and 2022, Juneau voters approved contributing some sales tax money to the fund.
The city invites developers, nonprofits and tribal governments to apply for grants and loans from the fund annually. The review committee includes city staff and members of the public from the lending and construction fields.
“The primary purpose for establishing the JAHF is to direct resources toward the creation of affordable (0% to 80% area median income (AMI)) and middle-income housing units (80% to 120% AMI) in the City and Borough of Juneau,” the 2022 and 2023 competition guidelines read.
The guidelines say for-profit developers borrowing from the fund must reserve at least 20% of the units they build for tenants earning 80% or less of the area median income for at least ten years or the life of the loan. That means rental rates for those units would be capped at $1,712 for an efficiency unit, $1,834 for a one bedroom and $2,200 for a two bedroom, according to the 2023 guidelines.
But the guidelines also say certain projects may require deviation from those requirements.
The Assembly is now revisiting the terms and conditions they’d like to set for future loans from the fund. City Manager Katie Koester brought a potential list of conditions they could formally adopt to the Assembly Committee of the Whole meeting on Monday night.
Many of them are already in the program’s guidelines, like the minimum number of affordable units. Others are more specific, like requiring units to be rentals or prohibiting short-term rentals for the life of the loan.
“There are pros and cons to adhering to these guidelines, and of course, the Assembly can still do whatever the Assembly wants – obviously within charter and law,” Koester told them.
Koester said this is a chance for the Assembly to more clearly set expectations for themselves, potential applicants and the public. She said they’re considering a fundamental question: “Is the Assembly okay awarding funds through the Affordable Housing Fund if there’s no affordability component?”
Member ‘Wáahlaal Gíidaak Barbara Blake said she supports adopting guidelines for future loans. She said she wants the Assembly to maintain the integrity of the fund’s title and prioritize projects that result in affordable units.
“This is not just money that comes out of nowhere, this is money that comes from our citizens,” she said. “And we have a responsibility to manage that in a way that provides for our community.”
Koester was the city’s public works director, not city manager, when the city agreed to loan Ridgeview’s developer affordable housing funds. In an interview, Koester said the idea to formalize the fund’s guidelines isn’t necessarily a response to that project.
“The Ridgeview ordinance and contract was a different time and a different lending environment,” she said. “I’m not sure if it’s a response, but it’s certainly a way to provide some structural guidelines and process around the fund.”
She said the two latest loan applicants recommended for funding show economic conditions may have changed. Both projects – which are set for public hearing on Feb. 5 – propose a monthly rent of $1,400 for some or all of their units.
Former city manager suggests removing affordability requirement
Ridgeview’s developer, Rooftop Properties, applied for a loan from the affordable housing fund to help build 24 units. The Assembly’s Lands, Housing and Economic Development Committee sent an ordinance appropriating $1.2 million to the full Assembly for approval in November 2022.
That version of the ordinance said five units would be rented to people making at or below 80% of the area median income per household. The Assembly approved the loan, along with grants to AWARE, St. Vincent de Paul and Tlingit Haida Regional Housing Authority, in December 2022.
After the Assembly approves the funding, it’s up to city staff to negotiate the terms and conditions of the lease. In March 2023, former City Manager Rorie Watt suggested they remove the requirement to include five affordable units at Ridgeview.
“In the details of negotiating that loan, we sort of uncovered the root economic issue,” he told the Assembly Committee of the Whole at the time.
Watt said the developer wanted 25 years to pay off the loan if it required five affordable housing units.
“That’s only going to get us five units at affordable prices,” Watt said. “That is a long time to tie up $1.2 million for that many units.”
Instead, Watt suggested a shorter term loan for a market rate project.
Former Assembly member Carole Triem said adding any units would help lower the overall cost of housing in Juneau.
“Our aim is on affordability,” she said. “One way we do that is through this directed requirement of having a certain number of units be reserved for a certain level of income. But another way we do that is just adding any housing units to what we currently have.”
‘Wáahlaal Gíidaak opposed removing the affordable housing requirement.
“To me, that is not what the intent of the Affordable Housing Fund is for,” she said. She was the only Assembly member to vote against moving the revised ordinance forward.
The revised ordinance passed at a special Assembly meeting in May without objection. It shortened the loan’s payment term from 25 years to 10 years and set the interest rate at 0% for the first five years and 2% for the remaining five years.
“When a bank is involved, the bank is going to only loan to a developer if they are certain that they are going to get return on their investment,” Watt told the Assembly at the May meeting. “The unfortunate problem we have is high cost of construction and land development makes projects very difficult to finance through conventional banking loans, which is why we have begun the path of low interest loans to help stimulate housing development.”
In an interview, Juneau Planning Manager Scott Ciambor said Rooftop’s loan contract doesn’t require the units to be rented rather than sold.
“The ordinance actually gives the manager the wherewithal to negotiate the final terms of the contract,” he said. “The final terms of the contract are new housing units.”
Rooftop Properties manager Garrett Johnson told the Juneau Planning Commission in December 2022 that they were designing the units to work either as condos or rentals.
“Doing them as condos gives the most flexibility, allowing the units to be lived in as a primary residence or used as a rental,” Johnson wrote in an email to KTOO.
Ridgeview is one of two projects that have received an Affordable Housing Fund loan without affordability requirements. Gastineau Lodges, a 72-unit apartment building approved by the Juneau Planning Commission for downtown in December, got a $700,000 loan to help with predevelopment costs. Ridgeview is expected to start making loan payments in January 2025.
Assembly Member Alicia Hughes-Skandijs chairs the Lands, Housing and Economic Development Committee. In an interview, she said she’s heard from Juneau residents who are upset about Ridgeview’s prices.
“I’ve definitely heard from people who are just like, ‘This is a loan from the affordable housing fund,’” she said. “And then saying, ‘Do you think a two-bedroom condo for half a million dollars is affordable?’ And I don’t.”
But she still thinks loaning Rooftop money from the fund was the right decision.
“I think having something built that otherwise would not be built is good,” she said. “If I gave a grant and those were the prices and it was condos, no, I would not feel that way. But it’s a loan, and there are that many more units in Juneau. So I do see that as the right move.”
Hughes-Skandijs said every affordable housing fund grant or loan helps the city refine the process. As they shape future guidelines, she said, she’d like to see the affordability requirement at the center.
