The Kodiak Island Housing Authority and its partners, Koniag Inc., and RurAL CAP are requesting the City of Kodiak sell undeveloped land at less than half its assessed value to create a “sweat-equity” housing program. Although the city council seemed open to negotiation, a final decision has yet to be made.
During a work session Tuesday night, Sept. 17, the housing authority requested the city sell roughly six acres of land in a wooded area near the municipal airport, listed as Lakeside Block 1, Lots 2-5 which includes a city impound lot, for up to $500,000.
The Kodiak Island Borough assessor values the four lots on Selief Lane at just over $1 million.
Initially the organization’s request to the city involved a request for a “donation” without any price tag attached. Mindy Pruitt, the executive director of Kodiak Island Housing Authority, said during the council meeting that is no longer the case.
“KIHA has resubmitted the donation request to include up to a purchase for $500,000. So thank you for the opportunity to resubmit our funding request, and I hope that that is an opportunity for you to have a discussion that we’re not asking for the land for free.”
And that’s not the only detail that has changed since this local housing program process began in April.
Originally the housing authority and RurAL CAP were going to submit a grant application to U.S. Department of Agriculture Rural Development to receive about $1.05 million in funding for the project. But the federal government wants more information on the construction costs included before the application is submitted later this year, possibly in October.
According to RurAL CAP’s estimates, it would cost a total of $2.5 million to develop the six acres in question, which includes installing infrastructure to hook up to city utilities, like water and sewer, and develop roads. The housing authority said in a letter it sent to the council on Sept. 10 that it would work with its partners like Koniag Inc. to secure the remaining funding not covered by the USDA grant. But the cost of the land and developing it would ultimately be passed on to the homebuilders.
On Tuesday night, Sept. 17 some, like city council candidate Jay Celli, argued that the potential funding shortfall is one of the reasons the city land should not be used for the housing program.
“I think that land should be utilized for some multi-unit housing, some multi-dwelling units, because $400,000 homes frankly, isn’t affordable," Celli said.
RurAL CAP estimates participating families in Kodiak could need a loan up to $443,700, which it lists as the maximum loan limit specifically for a USDA Rural Development 502 loan, to build one of these single family houses. However, the organization also said the monthly loan payments could be subsidized which would reduce the cost to $1,553 per month rather than $2,487 for a 38-year term loan with a fixed rate of 4.75%.
RurAL CAP’s plan is to build up to ten homes in the initial phase of the project on the four city lots along Selief Lane, mainly for workforce housing and families in the middle income range. And then, if successful, the organization has plans to build another ten potential homes in Kodiak during phase two.
Each family will work together, putting in 35 hours per week per unit to build the homes.
Advocates for the mutual self-help housing program pointed to the potential property taxes, utilities, and revenue these families would be contributing to the city if new homes are built.
But higher than expected costs per unit and a lack of information about specific parts of the housing project were reasons why Councilmember Bob Sanford and John Whiddon were unsure if they could support it or not.
“The other thing, too, is I’ve got three different documents saying there’s 10 houses, there’s 17 houses in testimony, or there’s 20 houses. Well, what is it?" Standford asked, "Because it’s going to make a difference to whether it pencils out or not… So my frustration I guess is the lack of clarity in the way this program’s been presented and what we’ve been given.”
By the end of Tuesday's discussion, the council decided to discuss the updated request further at its next regular meeting on Sept. 26. As this was a work session, there was no formal action or vote taken by the city council.
If the council agrees to sell the land for half a million dollars, and RurAL CAP is awarded the USDA grant, then the housing program could get off the ground next year in Kodiak.
