Holtan Hills Could be a Money Loser for Muni, Assembly Member Warns

Construction of a "Holtan Hills" access road is underway that skirts Girdwood School. (Photo by Soren Wuerth)

By Soren Wuerth

TNews Editor

Given the structure of a deal between a developer and the Municipality of Anchorage on a planned subdivision called "Holtan Hills", the city will likely gain little, break even, or it will stand to lose money, an Assembly member said last week.

The city stands to gain about $1.5 million from the first phase of the project before subtracting expenses, according to data provided publicly for the first time. While the municipality splits proceeds from lot sales, it must subtract costs. For developer Connie Yoshimura revenue from selling lots is profit. 

"I don't think this is the way we should be playing with public money because that's what we're doing here," Zac Johnson, who represents Girdwood and South Anchorage said during the meeting. "The risks are real. The costs are real. And, the upside—the benefits—is entirely hypothetical at this point."

Yoshimura, Assembly members and a city spokesperson fired back at Johnson, saying the deal brings new homes, roads and an upgraded sewer system to a valley desperate for housing and infrastructure.

Remnants of a decades-old garbage dump found during construction were uncovered Monday. Refuse contains car parts, oil canisters, garbage bags and even a coffee mug. (Photo by Soren Wuerth)

"I am well aware that what Girdwood needs is homes for teachers, for engineers. The calls I get for Girdwood lots... are from people who want to live in Girdwood. They have children that are in the ski program that this project is named after, 'Holtan Hills', Howard Holtan," Yoshimura told the assembly.

In the past four years, 80 percent of the new housing units sold in Girdwood have become unoccupied year round, or "dark homes", and of 25 new condos only one is occupied, Mike Edgington, chair of Girdwood's Board of Supervisors, said in public testimony.

"That's the reality of what is happening in Girdwood. That's the reality of—even if houses are being built—what will happen in Holtan Hills," Edgington said.

Yoshimura released estimates of her company's expected revenue and expenses at the meeting for the first phase of the project in a "pro forma". She said she expected lot sales to earn $11.7 million while construction costs and other expenses would come to $9.1 million for a profit of just under $2.6 million.

Remnants of a decades-old garbage dump found during construction were uncovered Monday. Refuse contains car parts, oil canisters, garbage bags and even a coffee mug. (Photo by Soren Wuerth)

Despite questionable returns on the municipality's investment in "Holtan Hills", Girdwood is getting road and sewer improvements, said Assembly Chair Chris Constant, referring to a $2.5 million road and sewer access project underway near the school. 

The ordinance authorizing "Holtan Hills" predicted the city's water department would receive federal money through an appropriation. Using federal funding for projects requires an environmental review, which could be expensive. 

"Here we are giving a developer acting in good faith a public beating for a condition she couldn't control," Constant said. 

Constant, who once worked for Yoshimura's brokerage firm, said he has since "severed" his relationship with her. He asked Yoshimura to respond to the charge that she is building "luxury homes".

The subdivision won't have only luxury homes, Yoshimura said, but will consist of "mixed housing" of duplexes, triplexes and ranch homes, as well as condominiums, with covenants governed by a homeowners association. She said she expected 187 units with three units per acre.

She rejected the prediction her lots, sold to builders, would become temporary vacancies, saying families would live in "Holtan Hills" year round. 

Chris Constant, Anchorage Assembly Chair. (Footage Photo)

"It's not my desire to build dark, two million dollar homes," Yoshimura said. She admitted that at least seven lots would be sold for at least $400,000 each to "help our pro forma", allowing her to carve out smaller lots for duplexes and fourplexes.

"And I will just tell you this," Yoshimura said, "this is what I say about Girdwood:  It's 40 minutes to Girdwood. It's 45 minutes to Wasilla. Which community would you rather live in? Most people would rather live in Girdwood. There's a certain demographic there that wants to be a part of that community and they have children."

Constant and other assembly members said their prior vote authorizing the sale of public land is settled and now the city has to follow through on its commitment. 

Responding to Edgington's suggestion that "Holtan Hills" will result in more luxury dark homes or short-term rentals, Assembly member Dan Volland said animosity by Girdwood residents against "Holtan Hills" is self-serving. 

"What I hear is I got mine, now I'm gonna pull the ladder up behind me," Volland said.

The vote to authorize municipal spending for off-site costs passed 9-1, with only Johnson voting no.

Holtan Hills construction on Tuesday. (Photo by Soren Wuerth)

Johnson said the municipality will have to pay, besides the costs, the market value for two lots promised in the ordinance for affordable housing units. 

"I don't think anyone can convince me this is a good deal, but we have made a commitment, and to not follow through on that commitment carries some costs and some risks. I think these are questions that we should have more thoroughly contemplated before we approved this ordinance, but here we are today," Johnson said.

"If this body sees value in investing in luxury housing and Girdwood, then it will be just as interested in investing in housing for people who actually live and work in Girdwood," he said. 

"Because the folks in Holtan Hills are going to need folks to plow their roads or serve their meals at restaurants or operate the ski lifts, or provide for public safety and education. They'll need those folks, but I will tell you, it is not going to (come from) their neighbors in the Holtan Hills," Johnson said.

Holtan Hills developer Connie Yoshimura speaking during an Anchorage Assembly meeting Aug. 12. (Footage Photo)