Annual cost of operating new Anchorage homeless and treatment programs estimated at $7 million

As the Municipality of Anchorage pursues the purchase of four buildings for homeless services and substance misuse treatment, the mayor’s office projects an annual cost of $7 million to operate the programs.

That’s according to Jason Bockenstedt, Mayor Ethan Berkowitz’s chief of staff, who spoke at an Anchorage Assembly work session on Wednesday about a proposed ordinance to be taken up July 14. If the Assembly approves AO 2020-66, the city could use up to $22.5 million in federal funds to purchase and remodel four buildings in Spenard, Fairview and Midtown. They would be used for day engagement, overnight shelter and treatment for those with alcohol and substance use disorders.

Homeless Alaskans currently staying at Sullivan Arena, outdoors and elsewhere would move to the new shelters, transitional housing or a proposed drug and alcohol treatment center in the Geneva Woods neighborhood. Sullivan Arena, a city-owned facility on Gambell Street, would revert back to its former status as a sports and entertainment venue. The city wants to close the Sullivan as a mass shelter as soon as possible once the Assembly approves the building purchases.

The real estate acquisitions would be funded by the CARES Act, allocated by Congress to offset impacts of the coronavirus pandemic. At Wednesday’s meeting, Assembly member Forrest Dunbar, who represents East Anchorage, asked how the city would fund the ongoing operational cost of the programs.

The two most likely funding sources would be a voter-approved, 5% alcohol tax that takes effect on Feb. 1, and proceeds from the sale of city-owned Municipal Light & Power to Chugach Electric Association, Bockenstedt said. Voters approved the nearly $1 billion sale of ML&P in 2018.

Some $15 million in proceeds from the utility’s sale are earmarked for the creation of a drug and alcohol treatment center. The administration wants to buy the Best Western Golden Lion hotel at the corner of 36th Avenue and the new Seward Highway and convert it into an Alaska Center for Treatment, a move vocally opposed by many homeowners in the Geneva Woods, College Village and Rogers Park neighborhoods. Dozens of them turned out for a community meeting on Wednesday, taking turns at a microphone to share fears and concerns about a treatment center near their homes. Loss of property values and neighborhood safety were two top concerns expressed.

Besides the proposed treatment center in Geneva Woods, the city administration is seeking to buy the old Alaska Club building on Tudor Road west of the Old Seward Highway and turn it into a day engagement center for homeless residents, and eventually an overnight shelter as well. Bean’s Cafe on East Third Avenue would also become a day engagement center, if the Assembly approves and if the nonprofit’s board agrees to sell the building. Bean’s Cafe has set up a committee to study the proposal and bring a recommendation to the board at its August meeting, said Lisa Sauder, executive director.

Americas Best Value Inn & Suites in Spenard would become transitional housing under the proposed real estate deal.

The pandemic’s arrival in March spurred the city to overhaul its homeless shelter system. To provide adequate spacing between beds, hundreds of homeless residents were moved into the Sullivan and Ben Boeke arenas. The Boeke has since closed as a mass shelter.

Bockenstedt said the city has no plans to revert back to the way things were pre-pandemic when people slept mat to mat at Brother Francis Shelter and the adjacent Bean’s Cafe.

The changes COVID-19 has forced the city to take as far as its homelessness response system bode well for the future, downtown Assembly member Chris Constant said at Wednesday’s work session.

“This is truly kind of a miracle of timing that all of the plans we have been developing lead to this moment and this decision,” said Constant.

“Six months ago, this was an impossible phenomenon, an impossible moment. Here we are now. We can actually house most of these individuals,” he said.

The Assembly will hold another work session on the proposed building purchases on July 10.

Anchorage has an estimated 1,100 unhoused people who live in shelters or encampments as counted during a single night in January. Thousands more live doubled up with other individuals or families, or live in cars, cheap hotels or other in marginal scenarios.

Jasmine Boyle, who heads the Anchorage Coalition to End Homelessness, said Wednesday that Anchorage’s homeless population is expected to increase as the pandemic continues. Her group is conducting an assessment of what Anchorage needs as far as additional shelter beds and housing units for the homeless. The report is expected out before the July 14 Assembly meeting.

Correction: An earlier version of this story incorrectly identified the neighborhood of College Village as College Park.

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