About six acres of city land on Selief Lane have been set aside to build at least ten new homes to support the local Kodiak workforce. That’s after the City Council decided last week to sell the undeveloped land to the Kodiak Island Housing Authority and its partners for $500,000 with the intent of negotiating a sale of the property for the full assessed value later on.
Dozens of residents have given public comments supporting the project in recent months. But others oppose using the land for this “sweat equity” project aimed at housing the local workforce. Some proposed using it for multi-family units instead. Others expressed concerns over the land’s proximity to an airport and a city impound lot.
Still, Kodiak Representative Louise Stutes urged the council to take advantage of this opportunity — and reminded everyone that this isn’t a handout.
“Participants must meet income eligibility and credit requirements to secure their mortgage," Stutes explained. "By skipping the traditional down payment and investing their time into building their homes, they’re not just building houses, they’re building our community.”
While home builders participating in the program can sell their homes after completing them, RurAL CAP — a nonprofit focused on alleviating poverty in the state — said most remain in their homes for years, citing a turnover rate of less than 10% out of 102 homes built in Alaska.
Earlier this month on Sept. 10 the housing authority and its partners RurAL CAP and Koniag Inc. sent a letter requesting the city sell the Lakeside Block 1, lots 2-5, for no more than $500,000.
But during the council meeting on Sept. 26, Councilmember John Whiddon proposed a funding mechanism he said would provide the maximum benefit to the city while also supporting the housing project.
Whiddon proposed selling the land for its full assessed value of just over $1 million, but then crediting roughly half of that back to the housing authority. The catch, he said, is that KIHA must use those funds to develop the land. His specific wording in the amended resolution was to credit, “an amount equal to the amount by which the selling price exceeds $500,000, with the credited funds being used by the housing authority to prepare the city land for residential development including the cost of water, sewer, and road improvements.”
“I think we can clearly demonstrate the City of Kodiak is a viable, willing partner in this residential development," he said. "To the extent that we are willing to help contribute to the site development by helping with the cost of water, sewer and any improvements.”
Whiddon argued that selling the property for its full assessed value also would help establish the tax base for the land on Selief Lane, and that it wouldn’t set a precedent for selling city land at significantly discounted rates.
But when all is said and done, the housing authority will still only pay $500,000 for the land. That does not include development costs which RurAL CAP previously estimated to be about $2.5 million.
Although Whiddon's proposed resolution didn't pass, the council did express interest in negotiating the final selling price during the next phase of the process which involves passing an ordinance with a specific purchase-sale agreement. Then the council could sell the property for its full assessed value yet only charge KIHA roughly half that amount once Whiddon's proposed credits are given back to the housing authority.
KIHA and its partners will still need to be awarded a $1 million grant from the United States Department of Agriculture before the project can go forward.
Editor's note: A previous version of this article stated that the Kodiak City Council agreed to sell the land for $1 million. The council actually agreed to sell the land for $500,000 per the resolution on the agenda, but intends to have KIHA pay the full assessed value of the property and then credit back the excess over $500,000 so that KIHA only pays a total of $500,000 for the property. Those final details are still being negotiated and will be dealt with in a future ordinance.
