The borough is seeking bids from contractors to complete road and utility work at the Alder Top Village (Keishangita.’aan) subdivision, in anticipation of putting 20 residential lots up for sale this summer.
The estimate for the work is $1.9 million, which would include surveying, clearing and grubbing the land, constructing a gravel roadway to the lots, installing water and sewage lines, and trenching for buried electrical, cable and phone lines, according to the bid notice.
Bids are due May 7 for the land development work just south of the Shoemaker Bay boat harbor.
The total cost to develop the lots will be between $3 million and $3.5 million, according to Borough Manager Mason Villarma. That includes what the borough has already spent, combined with the $1.9 million.
“We won’t make our money back on the sale,” he said of the anticipated revenues from the online auction of the 20 lots, each generally about a half-acre in size and facing Zimovia Highway.
The borough has been working to make more land available for residential development, in hopes of easing the housing shortage in town and, in time, building up property tax revenues.
The assembly was scheduled to vote Tuesday evening, April 22, to go ahead with the land sale as an online auction. The borough’s previous plan had been to sell 10 lots by auction to the highest bidders and 10 by lottery at a fixed price.
Villarma said it is financially prudent for the borough to sell all of the lots by auction — in hopes of receiving more money than a lottery.
“This change in approach is driven by the significant cost incurred to develop the subdivision,” the manager wrote in his report to the assembly.
“Given that the borough used public tax dollars to invest in this infrastructure, it is not in a financial position to forgo the potential margin between the appraised listing prices and what the market may bear at auction. Maximizing the return on this investment is necessary to replenish borough funds.”
Starting prices for bids will range from $46,400 to $69,600, depending on the size of the lot and whether it is in the front row of the subdivision facing the water or the second row.
Tentative dates for the auction are July 1 to Sept. 29, which should allow the contractor to get enough of the road and utility work done so that bidders can access the lots to check out the land and views before putting in their bids.
In a change from earlier plans, the manager recommended to the assembly for its April 22 consideration that the borough offer financing for land buyers. The proposed financing would include a 20% down payment and a floating interest rate, tied to a national benchmark, Villarma said.
Financial institutions can be reluctant to lend money on raw land, and borough financing could open up purchase opportunities for bidders who can’t afford to pay cash for the lots.
The municipality in 1996 took ownership of the property — which was occupied by a U.S. Bureau of Indian Affairs Alaska Native boarding school until 1975 — with the focus in recent years on using the land for residential development.
The borough’s plan for the acreage includes selling 20 additional residential lots, though the development timeline depends on the outcome of this summer’s land sale and funding.
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