Finding Solutions to Anchorage’s Housing Crunch

Micro units are just one of the many ideas being considered in the discussion about how to solve Anchorage’s housing shortage. According to the Urban Land Institute, the micro apartment is typically less than 350 square feet with a fully functional, self-contained bath and kitchen. Under this definition, single room occupancy (SRO) with a communal kitchen or bathroom does not qualify as a micro unit. Micro apartments have been built in New York, Philadelphia, Seattle and other urban areas. The size of the unit is dictated by municipal regulations. Now this housing concept is being discussed and looked at in Anchorage, particularly in the downtown area, as a revitalization opportunity.

In other urban communities, units have been built that are 30 feet wide and ten feet deep with a kitchen at one end and a bath at the other. Bathrooms and kitchens are the most expensive components of any housing unit, regardless of its overall size. Bedrooms and living space are the least expensive square footage costs. Therefore, it is difficult to analyse how these units would make rental income sense if built in downtown Anchorage where there exist the added expense of seismic ground costs and earthquake insurance issues. Renters interested in micro units are primarily low wage earners in retail and food service. To pencil out for investors or builders, a tax abatement may be necessary. Given the high cost of land and infrastructure development, even with a tax abatement, which is a very modest component of the overall costs, I doubt these micro units would produce enough rental income to be financially viable. Planners also need to keep in mind Anchorage’s unique lifestyle opportunities; its plethora of trails and parks, and easy access to our great outdoors attracts the ‘millennials’ to our community. A 300 square-foot micro-apartment doesn’t have enough room for bikes and other outdoor gear.

Perhaps a more viable (but more politically difficult to implement) concept would be an overlay district adding accessory dwelling units to existing lots south from the park strip to Fireweed Lane, and west from C Street to the Inlet.  This area already has single family homes, duplexes and condominium developments. It is a popular walking area with existing sidewalks and alleys where carriage units above a garage can be economically built. This overlay district would allow individual property owners to augment their mortgage costs by adding a unit for rent. These additional units are already being constructed on R2 zoned lots that have previously been developed as single family only homes within that district. These units would add to the tax assessed value of property rather than the reverse. It would generate income for the property owner and the MOA. Its only obstacle is the ‘not in my backyard’ objection by existing property owners who are unwilling to accept the city’s need for more housing. This area is close enough for walking and biking to the downtown core area and would help revitalize it. The popularity of City Market and Fire Island Bakery is a good testament to a more creative approach to the downtown dilemma.

Moving away from the downtown area, another more modest solution to creating more affordable housing would be the passage of a small lot ordinance. Right now, the minimum size for a fee simple, single family lot is 6,000 square feet with a minimum width of 50 feet. The largest cost for the development of any lot is the extension of roads, water and sewer across the lot frontage. Reducing the width of the lot to 40 feet would reduce the cost of the lot by 20 percent.

The emerging housing market for millennials, ages 25 to 35, is not for micro units, SRO’s, or even a carriage unit above a garage facing an alley. According to the National Association of Homebuilders 2014 study, 75 percent of this home buying group prefer to live in a single family home. Only 10 percent would consider living in an urban environment. And 25 percent would drive to a rural area in order to purchase a single family home with a double car garage and a laundry room.