Valdez Housing Incentives: “Nobody Gets Anything Unless A House Gets Built”
Photo by Jiyeon Juno Kim/ Ovibos Consulting
By Keenan James Britt
“We have all sort of agreed at this time that we are in a housing crisis,” Mayor Sharon Scheidt stated at the City Council Work Session on Housing last month.
At the session, City Manager Mark Detter and Planning Director Kate Huber presented their plan to Council for tackling the housing crisis in Valdez. It would use a four-phased approach that would focus first on developing housing units in the core of Valdez, where existing infrastructure is already in place, before breaking ground in new areas farther out in later phases.
While the four-phased approach provided a working model for where new housing developments should be sought, the pragmatic question remained as to how the city would achieve those developments.
Detter and Huber’s presentation to Council addressed the problem with two proposed incentive programs: the Alaska Housing Incentive Plan and infrastructure grants.
“I want to openly admit that any city incentives that we’re putting forward are a new concept,” Detter explained about the new approach, “In the past we haven’t looked to do this. We just allowed the free market to dictate the creation of development, but the free market doesn’t appear to be filling in the gap on this.”
The Alaska Housing Incentive Plan was first proposed by Detter at an earlier council work session on housing last August. Under the incentive plan, “the owner of property participating in the plan may receive an incentive of a one‐time payment of $10,000 per newly established dwelling unit.”
The newly established dwelling units are defined as “newly constructed single‐family, two‐family, and multi‐family residential dwelling units within areas of the City of Valdez that are outside the special flood hazard area.”
The value of $10,000 was an arbitrary amount, Detter explained, meant to provide some incentive to developers who are facing much larger costs in construction. “$10,000, I will openly admit, is not going to be the final determination whether somebody builds a new unit or not,” said Detter, “but it’s trying to give some kind of incentive...What’s too generous? What isn’t enough? That’s subject to interpretation.”
The other incentive program discussed at the work session was potential infrastructure grants to cover costs for developers establishing utilities like water and sewer on newly built properties. Unlike the housing incentive plan, which had full details available, the concept for infrastructure grants is at an early stage.
Presenters stated, “Staff are exploring ways to provide financial support to developers and incentivise infrastructure to benefit the public. This issue needs to be discussed and further developed.”
Detter sought Council’s guidance on how to proceed with infrastructure grants, but emphasized, “Ultimately, nobody gets anything unless a house gets built and the infrastructure gets built. We’re not fronting people any money.”
Council, as a whole, was supportive of the idea of infrastructure grants to help spur new development in Valdez: “It’s refreshing to see that we’re all moving in a unified direction,” commented Council member James Devens.
Council member Susan Love, however, did express some concern on establishing a precedent with the infrastructure grants: “I see us accidentally tripping into this unstructured expectation for future developers in different areas where it could be quite a bit more expensive or farther away from utilities.”
Council member Dawson Moore responded to Love’s comments, sharing the concern about establishing a precedent, but emphasizing the greater need for housing development: “We don’t want to set a precedent where we’re always expected to do this, but right now the need is really, really high, and we really need to get this done.”
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A requirement included in the Housing Incentive Plan states that for a developer to receive the $10,000 grant, the unit may not be used for short term rentals (less than 30 days): “Dwelling units may not be used as short‐term rental units for a period of five years after any award of funds under this Program”. Violation of this provision would require “the applicant or a subsequent owner” to remit the $10,000 to the City as liquidated damages.
After the work session the Copper River Record reached out to City Manager Mark Detter with a question as to what would happen if a developer claimed the $10,000 incentive, sold the house to a private family, and that family were to rent out a spare room for short- term rentals via AirBnB.
In an email to the Copper River Record Detter stated, “The clause you reference in the proposed housing incentive plan is part of an ongoing discussion towards addressing short term rental accommodations (AirBnB, VRBO, vacation rentals, etc.) in Valdez.”
Detter continued, “The overall goal of the incentive program is to create additional housing units in our community. The proposed language for the incentive plan aims to dissuade property owners who invest in such property from utilizing the property as a short term rental. As within any enforcement action, each individual case is evaluated on its own specific circumstances.”
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