Investors revive proposal for $65M hotel project in downtown Anchorage

A proposal for a boutique hotel project in downtown Anchorage, estimated to cost up to $65 million, is back on the table after an earlier effort failed.

The 12-story hotel project, proposed for construction above the Sixth Avenue transit center and EasyPark parking garage, fell apart in 2020 amid disagreements between the Anchorage Community Development Authority and David Irwin of the Irwin Development Group in Bellevue, Washington.

A new team of Alaska-based investors that includes Larry Cash, founder of RIM Architects, is working with the municipal agency to move the project forward again.

‘”We are very much motivated to see downtown Anchorage improve, and this project is fundamental to that future,” Cash said. “It’s in a really great location for making a transformative difference.”

The authority owns EasyPark, which manages thousands of parking spaces downtown, and the block where the hotel would be constructed, at Sixth Avenue between G and H streets.

The authority has been pursuing the 6th Avenue Redevelopment Project for more than five years.

On Jan. 11, the Anchorage Assembly unanimously approved a 99-year lease agreement with 6th Avenue Center LLC, a new development team that consists of Cash; Joe Jolley, president of Cornerstone General Contractors; Paul Wiltse, a partner in Venture North Group; and Jamie Kenworthy, founding manager of the 49th Fund. Venture North supports mergers and acquisitions and the 49th Fund is a private equity fund.

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The team sought and won the authority’s approval to keep the project alive, Cash said. The team will need to find financing for the project, among other key steps, before it can be built.

The hotel would be a first-class development, Cash said. According to the latest proposal, it would contain about 200 hotel rooms, slightly more than the previous project’s plans. It would also include about 30 residential apartments, and have space for restaurants, banquet rooms and shops.

It would be built around the seven-story EasyPark parking garage, extending above the garage and the now-vacant, two-story transit center next to the garage, long known as the 6th Avenue Parking Mall. The new building will be attached to the parking garage, which will provide parking for hotel guests and apartment tenants.

RIM Architects had done design work for the previous developer, and the design plans for the project are generally the same as before, Cash said.

But the previous teams’ plan to use the Hotel Indigo brand has changed. The new team is looking for a different brand, he said.

Plans call for the transit center to be renovated and turned into commercial space. People Mover, the municipal bus agency that has temporarily moved from the transit center to other offices downtown, will have a set-aside area there where it can operate again in the future, officials involved in the project said.

Officials with the authority say the development could provide new revenue to the city and improve the area.

For years, the transit center was the source of repeated calls to authorities for public drunkenness, drug use and unruly behavior. The authority completely closed the center in 2020, boarding up doors and covering windows to halt the activity and keep out unwanted visitors. The presence of permanent residents and hotel guests will further improve the area, Cash said.

Mike Robbins, the authority’s executive director, said the authority hopes the hotel project could lead to more new development downtown. It will be the first major hotel construction in downtown Anchorage in more than 20 years, since the Marriott Anchorage Downtown was built, he said in an interview on Tuesday.

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“It’s good for the city. A growing downtown helps a growing Anchorage,” Robbins said.

Chris Constant, the Assembly member for downtown, said the project will add to ongoing residential plans and projects that are key to improving downtown.

“We have long been in the need for the next spark of revitalization for downtown,” Constant said on Tuesday. “Hopefully, this will start a cascade of new development to support the migration of residents into the urban core.”

The project could cost between $60 million and $65 million, and create about 160 jobs during construction, the city said in a statement last week.

Under the current plans, construction for the hotel is expected to begin in October and be completed by September 2023.

The block will remain an area where city buses pick up passengers, although during construction the buses will stop at Sixth Avenue outside the J.C. Penney parking garage and the former Nordstrom store, Gant said.

The authority’s lease agreement with the new development team, like the one with the previous developer, calls for no rent payment for the development’s first two years.

Rent payments will fall below market value for three years after that, said Melinda Gant, community development director for the authority. By the sixth year, and for future years, the rent will be in line with market values, she said.

The new effort contains distinctions that should improve the project’s chances of success this time, Gant and others familiar with the project say.

The new lease agreement is for 99 years, decades longer than the lease agreement with the previous developer. That gives the new development team a better chance of securing financing for the project, she said.

The current development team is meeting deadlines and moving swiftly, she said. Communication between the team and city entities has improved significantly, she said.

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Robbins said the new development team has signed a labor agreement with Unite Here Local 878, representing more than 1,000 workers in the hospitality industry, confirming it will be a union hotel.

That and other deadlines the group has met are a good sign, Robbins said.

“I have a high level of confidence this group can pull this off,” Robbins said.

The project could provide more than $1.5 million in new annual revenue to the city and the authority, including from increased city property taxes and rental income to the authority, according to a summary of some of the anticipated benefits provided by the authority.

The project could also inject millions of dollars in new economic activity into downtown, according to an analysis by the Anchorage Economic Development Corp., provided by the authority.

Anchorage’s strong tourism sector provides economic justification for the project, Cash said.

The city had a robust tourism season last summer, even though large cruise ships did not come to Southcentral Alaska, a move related to a Canadian ban due to the COVID-19 pandemic.

Once the large cruise ships return to the region, tourism is expected to continue its strong growth, he said.

“We believe in the economy here,” he said of the new development team.