Developer wants to build housing on former hospital property

A Georgia-based developer who has taken a liking to Wrangell has offered the borough $200,000 for the former hospital property, with plans to tear down the building and construct as many as 48 new housing units.

Wayne Johnson’s offer on the 2-acre property is contingent on striking a deal to purchase six smaller borough-owned lots behind the hospital building, adding an additional 1.3 acres to the development site.

The purchase price for the hospital property, which has been vacant since SEARHC moved into its new Wrangell Medical Center three years ago, is below its appraised value, but borough code allows the assembly to approve such sales for economic development of the community.

Johnson said he needs the additional six lots to provide enough space to build a covered area for the development’s residents to put their vehicles and boats. “You need a place to park your toys,” he said in an interview Saturday, March 2.

His offer for the hospital property says it is contingent on reaching a “mutually agreeable” deal for the six lots.

The new housing would be a mix of one-, two- and three-bedroom units, probably condominiums but that’s still undecided, he said. It might be two three-story buildings with eight units per floor or one six-story building with eight units per floor.

He estimates teardown, demolition and disposal of the hospital structure at $850,000, with new construction estimated at $12.5 million to $15 million. The land acquisition costs would be added to those expenses.

The hospital property would be sold as is, with Johnson responsible for the costs of any asbestos removal or soils cleanup. The original building opened in 1967, with additions in 1974, 1988 and 1994.

Adding up all the development costs, the project needs at least 40 units to make it financially viable, Johnson said.

Interim Borough Manager Mason Villarma said the six additional lots would be sold at appraised value, which has not been established.

“There may be some other incentives we can offer” to help make the large private investment successful, Villarma said.

The planning and zoning commission last month voted to recommend that the assembly approve the sale of the six lots. Those parcels, which are zoned for open space, would need to be rezoned for the residential development in a separate proceeding.

The borough’s economic board was scheduled to meet Tuesday, March 5, to consider the sale of the hospital property at less than its market value for the economic benefits it would bring the community. The planning and zoning commission will consider the proposal at its March 14 meeting, Villarma said.

Municipal code requires endorsement from both the economic development board and the planning and zoning commission before the assembly can approve the deal.

“I think it’s in the best interests of the borough,” Villarma said.

Selling the land to Johnson, who is operating under the name Wrangell Heritage House Development, would put all the lots on the property tax roll.

Villarma anticipates the hospital property sale will be on the assembly agenda for its April 9 meeting.

The borough has been spending about $100,000 a year to heat and insure the building, and has been trying to sell the unused hospital since 2022 with nibbles but no firm offers. The assembly approved contracting with a real estate agent last year, but that agreement produced no offers and expired in December.

Johnson said he plans to come to Wrangell next month to hold a town-hall style meeting so he can listen to residents and answer their questions about his plans.

The development would not affect the property behind the hospital that is owned by the Tlingit and Haida Central Council, which operates its Head Start program in a building on its two lots.

If the sale is approved, and a deal reached on the six lots, the borough and Johnson are looking at closing on the transaction before May 30.

Johnson said he would plan to demolish the hospital this year and start construction on the new housing next year, with completion in 2026.

His preference is a concrete structure, with a steel-frame design as his second choice. He already has an architect working on some conceptual design plans.

“It’s somewhat of an ambitious project for Wrangell,” Johnson said. He is working to keep the price of the largest units under $500,000 each.

He first visited Wrangell last fall, unrelated to the hospital property.

He was in Ketchikan and friends suggested he take a trip to Wrangell. The fishing, the people, the new hospital and airport got him thinking, this could be an attractive spot to build housing for Lower 48 residents who want to spend their summers in Alaska.

He and his wife didn’t wait for the new construction. Johnson said they signed a two-year lease on a cabin, he bought two boats — one for crabbing and one for fun — and started setting up an extension of their life in Alaska.

“I pretty much decided it’s too damn hot in Georgia in the summer.” He and his wife live south of Atlanta.

As a real estate developer, among his long resume of private- and public-sector work, he heard about the borough’s efforts to sell the hospital property.

“In my looking around, I kept coming across the hospital.”

Villarma said he met Johnson at the National Rifle Association fundraising auction in town last November. They got together a couple more times as Johnson returned to Wrangell to pursue the potential development.

As he tells it, he literally walked into City Hall to ask.

Johnson’s time in Alaska goes back to 1974, when he was stationed with the Army in Fairbanks and where his wife worked as an emergency room nurse. After a few years there, he was transferred to the Army base in Anchorage, then later rotated out of Alaska and headed back South.

Over the years, while working for major accounting firms and other careers, he would frequently visit the state, spending time in Ketchikan, Craig, Sitka, Angoon and Juneau, until is 2023 visit to Wrangell.

“In my short time being here, you guys need some housing,” the 72-year-old said of Wrangell.

Johnson has developed several hundred housing units, mostly for senior citizens, but he sees his Wrangell plans a little differently.

“We want it to appeal to a wide range of people,” not just older, well-to-do Lower 48 residents looking for an Alaska summer home. He believes a mixed-age group of residents, including year-round residents, would add more “vibrancy” to the housing than just seniors.

Johnson has a varied resume, in addition to his real estate development. He holds two advanced degrees from Georgia universities: a Ph.D. in higher education leadership and a master’s degree in business administration.

In 2017, he went to work at the U.S. Department of Education, Office of Federal Student Aid, later moving into the position of chief operating officer before leaving the agency in 2019.

He was an unsuccessful candidate for the job as chancellor at the University of Alaska Southeast in Juneau in 2022.

In 2022, he ran for Congress in Georgia, coming in third in a field of six candidates in the Republican primary. He is running again this year.