{"id":13428,"date":"2016-05-22T08:04:04","date_gmt":"2016-05-22T15:04:04","guid":{"rendered":"http:\/\/spijue.wpengine.com\/news\/conflict-boils-over-pederson-hill-development-plans\/"},"modified":"2016-05-22T08:04:04","modified_gmt":"2016-05-22T15:04:04","slug":"conflict-boils-over-pederson-hill-development-plans","status":"publish","type":"post","link":"https:\/\/www.juneauempire.com\/news\/conflict-boils-over-pederson-hill-development-plans\/","title":{"rendered":"Conflict boils over Pederson Hill development plans"},"content":{"rendered":"
Juneau\u2019s Lands and Resources Division has an ambitious plan to fight the high cost of housing. But where city officials see a solution, several developers in town see a problem.<\/p>\n
Recognizing that Juneau\u2019s housing problem was only getting worse, the city began combing through its vast land holdings looking for buildable sites about a decade ago. In the 2006 update of the City and Borough of Juneau Comprehensive Plan, city officials recognized a dozen sites suitable for future development. Among them was Hill 560, a 400-acre chunk of city-owned land between Auke Lake and the Brotherhood Bridge known as Pederson Hill.<\/p>\n
Since then, Lands and Resources has been working to turn the currently undeveloped Pederson Hill into a large residential subdivision, and after 10 years that plan is nearing completion.<\/p>\n
\u201cIt\u2019s conceivable, if everything goes well, that we could have buildable lots ready to go by fall of next year,\u201d City Lands Manager Greg Chaney told the Empire. \u201cIt\u2019s possible that foundation work could begin then.\u201d<\/p>\n
Chaney has been working on the project, which will be split into at least three phases, for the past two years. For the first phase of the project, the city would develop as many as 86 5,000-square-foot lots on the hill. This may sound like a developer\u2019s dream, but a significant portion of the city\u2019s home-building community sees it as a nightmare.<\/p>\n
<\/p>\n
The roots of unrest<\/strong><\/p>\n Right now, deer, bears, fish and other wildlife are Pederson Hill\u2019s only denizens. You won\u2019t find houses, roads, sidewalks or streetlights at the site of the potential subdivision, if you can find it at all. It\u2019s not yet connected to the road system, but a recent land swap with a nearby church has provided the city with access to the property.<\/p>\n With that access, the city will punch a road into the subdivision, level all of the trees in the way of development and run utility lines to each lot, effectively developing ready-to-build lots complete with sidewalks and streetlamps, \u201call the good stuff,\u201d Chaney said.<\/p>\n According to the engineers\u2019 estimate, the first phase of the project will cost about $6 million. Accounting for a 30 percent contingency, as city projects must, engineers recommended a budget of $8 million. It\u2019s an expensive project \u2014 one that very few, if any, developers in town could undertake on their own \u2014 but Chaney sees it as necessary.<\/p>\n His goal for the subdivision is to provide options for young professionals and entry-level homebuyers \u2014 houses \u201cthat are less expensive than what the private sector is currently providing,\u201d he said.<\/p>\n Private developers build what people are buying and what they can make the greatest profit on. To that end, larger homes typically mean larger profit margins. City officials, on the other hand, are more motivated by ideals, City Manager Rorie Watt said, and fixing Juneau\u2019s housing crisis has been at the top of their to-do list for a long time.<\/p>\n \u201cThe city is getting involved because it believes it has to,\u201d Watt said. \u201cWe are more philosophically driven. We\u2019re motivated to build a style and size of house that isn\u2019t being built by the private sector.\u201d<\/p>\n To accomplish this, Chaney has planned small lots for Pederson Hill, which will force developers to build smaller, less-expensive homes. He said he has modeled the subdivision after Starr Hill and the Flats, both downtown neighborhoods that feature small, similarly-sized lots.<\/p>\n Chaney is chasing a $300,000 price point for Pederson Hill homes, a feat he believes he can accomplish by forcing developers to think small. Juneau developer and Affordable Housing Commission member Wayne Coogan thinks Chaney is \u201cchasing the wind\u201d instead.<\/p>\n Both he and developer Spike Bicknell said the reason the private sector isn\u2019t building houses for less than $300,000 is because it can\u2019t be done.<\/p>\n \u201cIt just ain\u2019t going to happen,\u201d Coogan said.<\/p>\n This is because of the high cost of building supplies and land. Almost all of the lots available for residential development in Juneau are assessed for about $100,000, according to Bicknell and several other developers.<\/p>\n \u201cIf that\u2019s your starting point, and you\u2019re going to build a 1,100-square-foot house, which costs $200,000 to $250,000 to build, it\u2019s just simple math,\u201d he said. \u201cYou\u2019re already out of the ballpark.\u201d<\/p>\n According to data from the Multiple Listing Service, a database containing 90 percent of home-sales records in Juneau, the median price for single-family detached homes last year was $385,000 \u2014 up $20,000 from the previous year and more than $65,000 from 2011.<\/p>\n According to Chaney\u2019s plan, Pederson Hill\u2019s ready-to-build lots would go for about $80,000 each.<\/p>\n <\/p>\n Developer discontent<\/strong><\/p>\n Earlier this month at an Affordable Housing Commission meeting, Coogan invited about a half dozen developers to air their grievances about the Pederson Hill project. His goal: to open a dialogue with the city, allowing developers to be heard before it\u2019s too late.<\/p>\n \u201cThere\u2019s some serious harsh comment out on job sites about this project, so I wanted to clear the air,\u201d Coogan said. \u201cI want to see if we can get this straightened out at an earlier stage.\u201d<\/p>\n At the meeting, Coogan recognized that he \u201cis kinda known for doing things at the last minute.\u201d In September, Coogan went before the Assembly with a proposal to scrap Bridge Park, the soon-to-be location of the bronze Whale sculpture, in order to use the land for housing development. That was the day before the bid period for construction of the park was set to open.<\/p>\n \u201cBut I\u2019m pretty sure somebody told Napolean not to go to Waterloo at the last minute,\u201d Coogan joked at the AHC meeting.<\/p>\n The comments weren\u2019t as harsh that night as some that Coogan has heard \u2014 which he said were unrepeatable \u2014 but they were heated nonetheless.<\/p>\n \u201cThis, as far as I\u2019m concerned, is in direct competition with me,\u201d developer Richard Harris told Chaney during the meeting. \u201cI think it\u2019s just wrong. If it\u2019s not illegal, it should be.\u201d<\/p>\n Harris\u2019 complaint was one that several other developers voiced as well. They see the project as dangerous government overreach that has the potential to negatively impact them. The city rarely ever gets involved with developing residential land, and developers are worried that this project will form a dangerous precedent.<\/p>\n \u201cThe government is going to turn into the developer,\u201d Bicknell, who was at the meeting, told the Empire in an interview. \u201cThey\u2019re going to turn into the real estate agent. They\u2019re going to turn into the financer. They\u2019re taking away from everybody who makes this community go around.\u201d<\/p>\n The last time the city disposed of land and worked to develop it was during the construction of the National Oceanic and Atmospheric Administration\u2019s Ted Stevens Research Institute at Lena Point. The city developed the road that led to the institute, and it developed lots along that road.<\/p>\n Developers weren\u2019t wild about that project, but the development of Pederson Hill really crosses the line, they say. It isn\u2019t tangentially connected to another project, such as the new NOAA lab. It\u2019s development for the sake of development, developers argue, and it could very well compete with the private sector, though Chaney said that was not his intent.<\/p>\n \u201cIt\u2019s difficult for us to compete against our own tax dollars; it\u2019s not right,\u201d developer Marciano Duran said during the AHC meeting. His development firm, Duran Construction Company LLC, owed more than $46,000 in property taxes, according to the city\u2019s real property foreclosure list for 2015. (Editor’s note: Since this article was published, Duran has paid his property taxes.)<\/em> \u201cI don\u2019t think anybody in the city, sitting in our position, would agree with this.\u201d<\/p>\n And he was right. City Manager Watt wasn\u2019t present at the meeting, but he said later that several of the developers\u2019 concerns held water and should be addressed.<\/p>\n \u201cI think there is a worthy philosophical question about what the city\u2019s role should be in entering into land development and housing development,\u201d he told the Empire.<\/p>\n If you ask the developers, they\u2019d likely say that the city shouldn\u2019t have any role in development. Bicknell doesn\u2019t even think the city should hold land. It would be better off if it gave it all over to developers and then charged property taxes on it, he said. \u201cWhat\u2019s the point in owning land if you\u2019re getting nothing for it?\u201d<\/p>\n Watt sees more room for conversation and said the answer likely lies somewhere on a spectrum. On one hand, the city could develop nothing. On the other, it could build lots and houses.<\/p>\n \u201cI think we\u2019re going to be somewhere in the middle,\u201d he said. Watt has since directed Chaney and Chief Housing Officer Scott Ciambor to develop a \u201chierarchy of involvement\u201d to help tackle this question. Neither has reported back to him with a finished product yet.<\/p>\n <\/p>\n If you build it, they will leave<\/strong><\/p>\n Developers come in all varieties. Some buy land, subdivide it and then sell it. Some only do lot-prep work \u2014 like what the city plans to do at Pederson Hill. Some only build homes on already-prepped lots. And some cover that whole continuum, buying undeveloped land and taking it all the way to the finished product.<\/p>\n The most vocal of those opposed to Pederson Hill \u2014 Bicknell, Duran and Harris \u2014 are bound together by a common thread. They all own undeveloped land. Bicknell owns the 100-acre Montana Creek subdivision, which he bought as undeveloped land 25 years ago. He has since developed 145 of the 180 lots.<\/p>\n Duran owns the seven-acre, 24-lot Vista Del Sol subdivision off of Glacier Highway, most of which is still undeveloped. He also owns more than 100 acres of entirely undeveloped land elsewhere in the city. Harris owns almost 20 acres next to Vista Del Sol, which he is currently trying to subdivide and develop.<\/p>\n Though they would argue that all developers will be hurt if Pederson Hill goes through as planned, the land-owning developers are likely to be the most heavily impacted. But the extent to which the Pederson Hill project will hurt them \u2014 or whether it will at all \u2014 depends on how the city ultimately decides to sell its ready-to-build lots, Watt said. And that decision has yet to be made.<\/p>\n \u201cI think we\u2019re on the right side of the hierarchy of involvement,\u201d Watt said. \u201cBut I think, depending on how the property is disposed of, we could have unintended consequences. If we put that land on the market too quickly, we could have a negative impact on other development.\u201d<\/p>\n On that point, city officials and developers agree. But the developers are concerned that Pederson Hill could have longer-lasting consequences. The city has the capital to take on massive near-term projects such as Pederson Hill. Chaney frequently points out that bigger projects come with efficiencies of scale, making them tougher to compete with. The city also has a risk horizon far beyond that of the private sector.<\/p>\n When private developers buy land, they lose money in the form of property taxes every year that land goes unsold. The city doesn\u2019t have to worry about paying property taxes on its own land.<\/p>\n For these reasons and others, the city represents a sizable threat to private developers as it plans to move further into their territory than ever before.<\/p>\n \u201cTo me, it\u2019s like if the city opened a gas station or a grocery store,\u201d Coogan said. \u201cCan you imagine how disheartening it is for developers to see the very entity that is regulating them and collecting taxes from them going out and competing with them in the market?\u201d<\/p>\n It\u2019s disheartening enough to reduce the number of developers in the community, either by out-competing existing developers or by scaring aspiring builders away from the industry, Coogan said. Bicknell and other developers share the concern.<\/p>\n \u201cI think the City and Borough of Juneau is looking at the small picture, not the big picture,\u201d Bicknell said. \u201cIf they go forward with this, it may help some people, but it\u2019s going to hurt some people, too, and they need to think about that.\u201d<\/p>\n And he\u2019s going to do all he can to make them think. There are still a lot of steps to go before Pederson Hill is ready to build. The first one is getting the city to adopt the Lands Management Plan, a guiding document that recommends the disposal and development of Pederson Hill. The LMP will be before the Assembly at its meeting Monday night. Bicknell said he\u2019ll be there to raise his concerns about Pederson Hill. Duran said he\u2019ll be there, too.<\/p>\n Coogan and Watt both said they hope all of the developers who are aren\u2019t happy about the project come to the meeting and make their worries known.<\/p>\n \u201cI think it\u2019s our job at the city to frame the question,\u201d Watt said. \u201cWe elect politicians to decide things like this, and in order for them to do it, we need to make sure that we\u2019re having the right debate. Even then, people may not like the answer.\u201d<\/p>\n Editor’s note: An earlier version of this article said that developer Marciano Duran owed more than $46,000 in city property taxes. Though this was true at the time of publication, Duran has since paid his property taxes. <\/em><\/p>\n \u2022 Contact reporter Sam DeGrave at 523-2279 or at sam.degrave@juneauempire.com.<\/p>\n","protected":false},"excerpt":{"rendered":" Juneau\u2019s Lands and Resources Division has an ambitious plan to fight the high cost of housing. But where city officials see a solution, several developers in town see a problem. Recognizing that Juneau\u2019s housing problem was only getting worse, the city began combing through its vast land holdings looking for buildable sites about a decade […]<\/p>\n","protected":false},"author":107,"featured_media":13429,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_stopmodifiedupdate":false,"_modified_date":"","wds_primary_category":4,"footnotes":""},"categories":[4],"tags":[75],"yst_prominent_words":[],"class_list":["post-13428","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news","tag-local-news"],"_links":{"self":[{"href":"https:\/\/www.juneauempire.com\/wp-json\/wp\/v2\/posts\/13428","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.juneauempire.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.juneauempire.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.juneauempire.com\/wp-json\/wp\/v2\/users\/107"}],"replies":[{"embeddable":true,"href":"https:\/\/www.juneauempire.com\/wp-json\/wp\/v2\/comments?post=13428"}],"version-history":[{"count":0,"href":"https:\/\/www.juneauempire.com\/wp-json\/wp\/v2\/posts\/13428\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.juneauempire.com\/wp-json\/wp\/v2\/media\/13429"}],"wp:attachment":[{"href":"https:\/\/www.juneauempire.com\/wp-json\/wp\/v2\/media?parent=13428"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.juneauempire.com\/wp-json\/wp\/v2\/categories?post=13428"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.juneauempire.com\/wp-json\/wp\/v2\/tags?post=13428"},{"taxonomy":"yst_prominent_words","embeddable":true,"href":"https:\/\/www.juneauempire.com\/wp-json\/wp\/v2\/yst_prominent_words?post=13428"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}