Major Anchorage development deal to build new city health department and grocery store fails
The Municipality of Anchorage paid $ 1.1 million to settle a dispute with a Washington-based developer over a failed deal involving a major project on East Tudor Road.
The developer and the city had contemplatedD a huge new complex on a largely vacant lot at the southwest corner of Tudor and Elmore roads. Plans included a new building for the city’s health service, a grocery store, apartments, restaurants and offices. New apartments in the city center for the elderly were also part of the agreement.
The Anchorage Assembly accepted the settlement in January with DHHS 1, the company approved by the city to build the project. City officials have said they are still hopeful the effort could go ahead with a new developer in some form or another.
The regulation provides $ 450,000 to DHHS 1. The company is owned by David Irwin of Irwin Development Group in Bellevue, Wash., and Mark Lewis, Irwin’s 5% project partner of Alaska Pacific Development.
The settlement also paid $ 610,000 to four Anchorage architecture and engineering firms, primarily Rim Architects, for their work on the project, according to city documents.
Irwin said this week he was happy with the settlement. But he would have preferred to finish the project after three and a half years of effort, he said.
“I was trying to find ways to make something work,” he said.
The city spent around $ 320,000 on the project before terminating the deal, on things like rezoning fees and consulting services, a city resolution shows. DHHS 1 and its contractors had spent approximately $ 1.4 million.
As part of the settlement, the city receives the design and engineering plans and other work done for the proposed facilities, said Chris Schutte, the city’s director of economic and community development.
He said the city continues to push the project forward to prepare it for a new developer. Finding one would likely require a new bidding process, he said.
“The bones of the previous effort are there, so it would make sense for a future development partnership to follow the same general approach to site design (and other details) on the Tudor-Elmore campus,” Schutte said. in an email.
“That being said, each developer will likely have their own ideas of how they would like to develop the site and deliver the most important thing that we originally planned to deliver: a new building for the Anchorage Health Department,” he said. said Schutte.
A “creative” proposal
The city started the project five years ago when it sought “creative” proposals from developers to fund the replacement of the city’s aging health department building on Eighth Avenue and L Street, according to the 14 page development agreement.
The plans could include municipal land donations and property tax breaks, the city said.
The goals also included boosting Anchorage’s redevelopment and economy.
Irwin and Lewis responded with different plans, and city officials liked both ideas. They asked the developers to work together and they agreed, Irwin said.
Lewis could not be reached for this article.
The plans proposed mixed-use development valued at more than $ 150 million, Irwin said. It included potential tax breaks of more than $ 8 million and more than 15 acres of city land donations to the developer once milestones were met.
The area, just south of the University and Medical District, is very busy. The land where the development would be built currently houses a bus barn for the Anchorage school district and a motorcycle training center.
As part of the deal, Irwin and Lewis are said to have financed and constructed the new health department building and a new bus station in a new location, at a cost of around $ 22 million. The city would have owned these properties, according to the settlement agreement.
The deal also provided for new apartments for mixed-income seniors in the city center, where the old health service building is located.
Complications arise from moving the school bus barn
The deal fell apart in part because of complications related to the proposed school bus barn move.
The the city and the developer have sought to build the new bus station on undeveloped land owned by the city, away from campus, at a site east of Elmore Road, where Dr Martin Luther King Jr readers intersect and the Tudor Center.
The city said the new location of the road barn was costing too high, causing that part of the project to stop, according to the city’s resolution.
In addition, funding for the Department of Health building was compromised when the Alaska Department of Transportation and Public Facilities denied road access from Tudor Road until road infrastructure related to the project is completed, the resolution noted.
“As a result, the developer was unable to start construction of the new building (Anchorage Department of Health) on the date required by the development agreement of June 30, 2020, and the development agreement (and the project) has been terminated, ”the resolution reads.
Irwin said the US Army Corps of Engineers must authorize construction of the new bus barn site. A response from the federal agency did not arrive until well past the June 30 deadline, he said. The delay has raised uncertainty about the cost and work required to develop the site, he said.
After it became clear that the road barn development would not happen, the city had to change the terms of the contract to allow the rest of the project to move forward, Irwin said.
But the city failed to take that step, so construction on the new health department building couldn’t start on time, Irwin said.
“It didn’t start because we didn’t know how the city would pay for the project,” Irwin said. “An integral part of the funding was to give us this land under the existing bus barn. But they couldn’t give us the land because they didn’t know if the road barn was moving. So I’m like, city, how do we start construction (of the health building) when you don’t know how you’re going to pay for it? “
Irwin said he was looking for ways to resolve the disputes. He said he suggested an extension – the project had already been extended once in 2019 – to save time to find solutions.
But the city was unwilling, he said.
Disappointed developer and members of the Midtown Coven.
A mediation process in December led to the settlement.
“They canceled the deal altogether, which is what caught my eye,” Irwin said. “We worked together for 3½ years and now you want to cancel the deal? No phone call or nothing.
Schutte said in an email that the settlement agreement represents the views of both parties.
“We think the settlement agreement speaks for itself,” he said.
Felix Rivera, assembly member for Midtown, said his biggest disappointment with the deal being terminated is that a grocery store will not be built, at least for now. Area residents have long wanted a grocery store in the area, he said.
Rivera is hopeful that a new developer can be found, preferably in Alaska, he said.
Meg Zaletel, also a member of the Midtown Coven, said area residents generally want the project to come to fruition. Some people, complaining about the fumes from the bus station, want this facility to be relocated, she said.
“They weren’t really happy that the project ended and ended after a lot of money had been spent,” she said.
She said residents want to make sure traffic improvements to increase safety are part of the plan, she said.
The city project is the second that failed for Irwin, amid disagreements between the two parties.
Irwin was the original developer of a 12-story building charming hotel at Sixth Avenue between G and H streets, on land owned by the Anchorage Community Development Authority, a municipal agency.
The project struggled to move forwardIrwin citing the poor economy during the COVID-19 pandemic as a complicating factor.
Both sides walked away from that effort without the need for mediation or settlement, Irwin said.
Larry Cash, founder of RIM Architects, is part of a new investment group that is trying to move this project forward.