-- During the past 10 years, the average cost of a single family home has increased 55 percent while the average family income only rose 39 percent.
-- During the past 10 years, the average rent for a two-bedroom apartment has increased 58 percent.
-- "Affordability income" now estimated to be $100,000 a year to afford an average priced home, $65,000 a year to afford a condo and $50,000 a year to rent a 2-bedroom apartment. An undesirable byproduct of this problem is that multiple families are crowding into single-family residences, creating both infrastructural and social problems in some neighborhoods.
-- Anchorage will need about 9,000 new homes built over the next 20 years just to meet projected population growth.
The Anchorage Bowl is running out of available land. New construction incurs an increasing danger of encroaching upon existing parkland, which is not only unacceptable to park advocates, but which also impairs the value one of our major attractions as a community. Increased vertical development is not considered financially feasible at this time. Reducing the minimum size of building lots is more financially feasible, but not allowed under current municipal code; those who lived here at least 10 years recall the big stink raised about "site condos", which provided inadequate access for the fire department's ladder trucks.
Ms. Brown refers to a three-page memo entitled "Recommendations to Spur Development of Housing in Anchorage", submitted on May 9th, 2012 to the Mayor's Kitchen Cabinet by the Work Group on Affordable Housing. The memo contains a market basket of recommendations and incentives which together could begin to reduce the scope of the problem; a screenshot of their primary recommendations is included at the end of this post.
But there's one recommendation missing which could significantly mitigate this problem: Construction of the Knik Arm Bridge between Point Mackenzie and the Anchorage Bowl. The premise is that the bridge would create a greater market incentive to open up Point Mackenzie to residential development. The map posted below shows why that incentive does not currently exist:
The bridge would be built at the location of the question mark. Currently, a resident of Point Mackenzie must drive 20 miles to get to Wasilla, another eight miles to get from Wasilla to the Glenn Hwy junction, then another 35 miles to get to Anchorage. That's a total of around 60-65 miles. Even during the summer, that could become tiresome; during the winter, it becomes hazardous during poor weather. The Knik Arm Bridge would reduce that distance to 10 miles at the most. This would create a demand for housing in the area, which in turn would spur construction. Unfortunately, detractors have labeled it a "bridge to nowhere". Factors working against the Knik Arm Bridge:
-- Amount and Uncertainty of Costs: Total costs are still uncertain; the latest estimate is around $1.086 billion as put forward by the Knik Arm Bridge and Toll Authority (KABATA) in December 2011. However, the $ 1.086 billion number does not include financing costs, but does include receipt of a federal loan that KABATA has been turned down for three times. KABATA has published a two-page handout summarizing their facts about the bridge, while Knik Bridge Facts presents arguments for and against the bridge.
-- Eastern Terminus: The eastern terminus would route bridge traffic directly into downtown through the Government Hill neighborhood, creating traffic problems during peak periods; locals have understandably objected to this. A better solution would be to route the terminus through the Boniface area or to the Hiland Road junction.
-- Selfish attitudes by some property owners: Because of the housing bubble, some property owners got the idea that their houses weren't just homes, but "investments" or "piggy banks". They believe government has an obligation to guarantee a continual increase in property values. Our disproportionate reliance upon property taxes fuels these sentiments further. Residential construction in Point Mackenzie would slow the rise of residential property values in the Anchorage Bowl. Of course, passing a municipal sales tax with a dollar-for-dollar reduction in property taxes would reduce the burden upon property owners.
-- No additional property tax revenue for Anchorage: New home construction at Point Mackenzie would not generate additional property tax revenue for Anchorage because Point Mackenzie lies within the Mat-Su Borough. Consequently, Anchorage's political class lacks a significant financial incentive to promote Point Mackenzie as a residential alternative.
The bottom line: As Anchorage continues to grow, it will need more land to expand upon. Available land in Anchorage is disappearing. Land is available across the Knik Arm at Point Mackenzie, but because it takes over an hour to get from Point Mackenzie to Anchorage, there's little incentive for exploitation. The Knik Arm Bridge would create the necessary incentive for exploitation, and best of all, it would be market-based for the most part. The free market remains the most foolproof solution to solve most economic problems.
The screenshot of the Work Group on Affordable Housing's primary recommendations appears after the jump:
|Click to enlarge or click HERE for source|