Wrangell is not immune to the nationwide shortage of electrical transformers, and the delivery delay has pushed back the borough’s sale of 20 lots at the residential subdivision near 6-Mile Zimovia Highway until the spring.
The borough wants to wait until the streets and utilities are finished at the property before opening access to the land for potential buyers to evaluate which lots they may want to buy. The transformers and buried electrical lines are part of the work.
The land sale had been tentatively planned for late summer or fall, but the delay in receiving transformers forced a change in plans, Borough Manager Mason Villarma said.
Wrangell is not alone in the waiting line.
“Distribution transformers, used to step down medium-level voltage to service-level voltage for end-use electrical consumption, are currently experiencing an unprecedented imbalance between supply and demand,” the National Renewable Energy Laboratory in Colorado reported in March.
“Utilities are experiencing extended lead times for transformers of up to two years (a fourfold increase on pre-2022 lead times),” the report said. “Current shortages have been attributed to pent-up post-pandemic demand; difficulty recruiting, training and retaining a skilled workforce; component supply chain challenges; and materials shortages.”
One good thing about the delayed land sale, Villarma said, is that interest rates will likely have started coming down by then, lowering the cost of construction and mortgage loans.
The borough is developing the property — the site of the 1932-1975 Wrangell Institute, a Bureau of Indian Affairs Alaska Native boarding school — into 20 residential lots in the first phase, with a second and even a third phase possible, if there is enough demand.
The subdivision is called Alder Top Village (Keishangita.’aan).
The lots in the first phase will be around a half-acre in size, with 10 parcels going on sale by lottery and 10 planned for an online auction.
Sale prices had been estimated at between $45,000 and $70,000, depending on parcel size, location and water view, but those numbers could change, Villarma said. The borough will get the lots reappraised before the sale to determine their market value.
Regardless of what the parcels sell for, the borough will spend significantly more developing the property than it will recover from the land sale, he said.
The borough will have spent more than $2.5 million to develop the land, Villarma said, covering surveys, clearing, leveling and fill to create buildable lots, putting in streets and buried utilities. Depending on the results of a new appraisal, the municipal residential construction fund might recover around half of the cost if all 20 lots are sold.
“It’s a big loser” for the fund, Villarma said, though making lots available for homeownership is an important consideration and a longtime goal of municipal officials.
After the land sale, the borough estimates the residential construction fund will end the fiscal year next June 30 with a balance of just over $400,000, making it hard for the municipality to front the expenses of developing a second or third phase at Alder Top, the manager said.
Depending on demand for the 20 lots in the first phase, the borough could consider selling acreage to a private developer for the next phases, he said.
The municipality took ownership of the property in 1996, with the focus in recent years on using the land for residential development.
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