By Larry Talley
Juneau, Alaska could lose seven irreplaceable historic structures on Telephone Hill. Their imminent destruction is not from fire or other natural hazards, but from citizen tax dollars at work. The City and Borough of Juneau have decided to spend $5.5 million to demolish this historic neighborhood, in the forlorn hope that it can be developed as high-density housing.
Among the structures slated for demolition is the Webster House, built in 1882, one of the oldest continuously occupied homes in Alaska.
The Boondoggle Begins
In 1984, the State purchased the site, in some cases from unwilling sellers via eminent domain, with intentions to build a new Alaska capitol complex. Thus starts the boondoggle. The new capital failed to materialize and in March 2023 the site was conveyed to the City and Borough of Juneau. The city began a multi-year public process to redevelop Telephone Hill into a “major urban housing development.”
Emotions at public meetings were higher than ever before. Perhaps to calm nerves, City Manager Rorie Watt promised: “[The] range of options would certainly include a ‘do nothing’ option and leave the houses as they are today.” However, when the city presented its survey results in December 2023, these were the four concepts presented:
Concept A: Demolish the existing structures to build new townhomes
Concept B: Demolished existing structures to build a mix of new townhomes and apartments
Concept C: Demolish existing structures to build new mid-rise apartments
Concept D: Preserve existing structures and add infill homes and apartments
The survey was inconclusive with Concept C and D tying. “Do nothing” was not a choice.
CBJ Pushes Ahead Despite Zero Developer Interest
In late 2024, CBJ issued a request for information to ascertain developer interest in redevelopment of Telephone Hill. One developer responded, but with no plan, design, timeline, or cost. Disappointed with the results, the city decided to demolish existing homes to make a more attractive opportunity for developers even though there was no developer interest and no public purpose declared.
After site prep, CBJ’s idea was to seek a developer to build high-density housing on a difficult site in challenging market conditions. According to the CBJ’s Juneau Telephone Hill Market Analysis, Feasibility Analysis and Development Strategy: “…both the specifics of the site and the general state of development in Juneau make it a very expensive place to develop… There is no scenario that breaks even.”
Lacking Proforma, Lacking Accountability
Residents who preferred the preservation of Telephone Hill rallied behind Concept D, the concept to retain existing structures and add infill homes and apartment buildings.
Standard protocol obliges the municipality to produce a proforma (a financial feasibility study) that discloses the cost per housing unit. A proforma answers an important question: Is the price tag per housing unit acceptable to the City and the voters?
The Assembly has not provided a proforma for Concept C. However, the public record reveals that large, unquantified subsidies will be required for housing units under Concept C. Constituents make clear the unpopularity of starting demolition without answers to the cost question.
The Market Analysis proposes that 25% (roughly 39 units) of the 155 units in Concept C are destined for short-term rentals— essentially AirBnBs. 116 units would remain for people who live in Juneau.
According to the Telephone Hill Place Guide, Concept D results in 36 new units plus 16 current units, equaling 54 total. Many locals believe that more than 13 current units is unrealistic, so Concept D may only yield 51 units for people who live in Juneau.
Renovations required for Concept D could be offset by revenues upon the sale of properties. Not guaranteed of course, but not an unfounded assumption. (Nowhere close to the magical thinking that demolition will suddenly attract builders.)
According to this math, the housing difference between Concept C & D, for which CBJ will assume financial and development risk of between $5.5 to $9 million, is 116 units minus 51 units, or 65 additional units available for people in Juneau. That’s either $107,843 per unit (at $5.5 million demo / siteprep) or $176,470 / unit (at $9 million demo/siteprep/road). Keep in mind that the Concept C units are a mix of 469-square foot studio, 728-square foot one-bed, and 947-square foot two-bed apartments, while some of Concept D units are more generously sized.
Either way, a subsidy of $107,843 or $176,470 per unit seems quite large. What a shame that for so much subsidy, no affordable units will be guaranteed. In fact, the Market Analysis states that these units are likely to “rent for a premium over existing housing stock.”
Additionally, CBJ indicates that more subsidies may be needed in the future. CBJ also recognizes that 155 units may be an overestimate of what is possible. Missing from the boondoggle is any sense of accountability to taxpayers or evidence of a return on investment.
Unreasonable Risk
The City Manager told the Assembly at a November 3rd meeting that Concept C is risky and bold. As a citizen, I believe it is unreasonably risky because the Assembly would spend a large amount of public funds to demolish the current housing on Telephone Hill, without first providing a proforma for Concept C as compared to Concept D. The pro forma for Concept C would include a minimum of $5.5m for demolition and site preparation that will be spent before a single housing unit is built. Concept D will not begin with that large a liability.
CBJ assembly members should direct staff to provide the Assembly with a proforma for Concept C and D. Additionally, CBJ should quantify the re-cycle value of demolished building materials owned by taxpayers.
Larry Talley was born in Ketchikan, attended the University of Alaska Fairbanks, moved to Juneau in 1977 and worked in Juneau for over forty years as a computer programmer. Finding retirement not perfectly satisfying, he occasionally captains a whale watch boat and guides hikes.