A Spenard development is rapidly reshaping the neighborhood. It’s barely making a dent in Anchorage’s housing demand.

An affordable housing builder has given the heart of Spenard a $40 million facelift.

Cook Inlet Housing Authority has built a cluster of apartment complexes near the corner of Anchorage’s 36th Avenue and Spenard Road, replacing a contaminated industrial site, a strip club and auto shops with about 100 apartments. It has converted an old church into a community center, bought and upgraded commercial buildings, and created a smattering of new duplexes and triplexes from old homes.

They’re not done yet.

The nonprofit housing authority is adding 48 units in the area this summer and is planning to build dozens more apartments next year if it can secure funding, agency officials said. An affiliate of Cook Inlet Region Inc., an Alaska Native regional corporation, the authority leverages local, state and federal support to build housing for all income earners, though it primarily serves people with low-to-moderate incomes.

Housing market observers say the apartments are vital as Anchorage rents soar. The larger two-bedroom units often go for just over $1,000 monthly, not including electricity, below the average market-rate apartment in Anchorage that costs $1,339.

But they’re still just a small part of the solution to the huge need in Anchorage for more housing.

Demand for the apartments is extremely strong, said Sezy Gerow-Hanson, a spokeswoman for the agency. She said over the last year, the agency received almost 2,400 applications for 68 units.

“There is a lot of competition right now,” she said during a tour of the area last month.

[Rental prices for homes and apartments rise in Alaska, led by a sharp spike in Anchorage]

Longtime Spenard residents say the improvements have revitalized a busy corridor with new landscaping and buildings, most adorned with the solar panels Cook Inlet Housing often uses to reduce operating costs. They hope the changes plant a seed that prompts other property owners to make their own improvements.

Candida Joseph, 65, recently moved into a new 19-unit building for seniors on nearby Chugach Way. The apartments feature big windows that let in lots of light and open floor plans for the kitchen and living area.

Sitting in a walker in the sun early last month near the building, Joseph said she had previously been homeless. She’s now paying $800 monthly for a one-bedroom on the second floor, a price she can afford on her limited income.

“I love it here,” she said. “And I love my view.”

A ‘holistic’ community

The upgrades, near the agency’s longtime offices at 3510 Spenard Road, have been in the works for years.

“It’s just delightful what they’re doing,” said Harriet Drummond, the state representative for the area.

The intersection used to be a dive, she said.

But about 10 years ago, Cook Inlet Housing acquired PJ’s strip club at a federal auction, after the owner was convicted on charges that he used the place to sell cocaine.

The agency picked up several other properties, including the site of a former gas station that closed in the 1990s, after underground tanks contaminated soil.

Cook Inlet cleaned up the pollution and in 2017 built its first apartment building in the area, replacing the strip club at 3600 Spenard.

The 33-unit, mixed-use building features balconies, exposed wood-beam awnings, and the offices of Cook Inlet Lending Center, a part of the agency that provides home loans and small-business loans.

Cook Inlet Housing added a second multi-family complex last year, at 1310 W. 32nd Ave.

This summer, it’s adding three more buildings along nearby Chugach Way, a $14 million investment known as Phase 1 of Ch’bala Corners. Two buildings were recently completed, including the senior complex and an eight-plex for families. Another 21-unit complex for families will soon be finished.

[Some Alaska workers are facing a crisis in housing. Employers hope that if they build it, employees will come.]

The agency is also working to land funding in hopes of building dozens more apartments at Ch’bala Corners next summer. Lining up federal tax credits and philanthropic grants is extremely competitive, factors that could delay those plans, said Mark Fineman, vice president of development for the authority.

Jeannette Lee, a senior researcher focused on housing policy for Sightline Institute, a think tank in Seattle, said Cook Inlet has created a “holistic approach to building a community” in Spenard.

The renovated 1950s church called The Nave, formerly The Church of Love, is a gathering space for public events. The mix of apartments and commercial space, including a low-rise office building along Spenard and a commercial kitchen along 36th, support foot and bike traffic. It’s near the bus line, further reducing the need for a car, Lee said.

The concept reduces rent and transportation costs, the biggest household expenses in Alaska, at a time of rapid inflation, she said.

“Housing shouldn’t have to be a huge burden on people’s household budgets,” she said. “The overall vision and goal they have in mind is a good one.”

Inspiring other development

Spenard residents said they hope the apartments attract new businesses and investment, and reduce problems in the area.

Irene Persson-Gamble, a longtime resident and member of the Spenard Community Council, said that during the Alaska oil boom that began in the 1970s, many Spenard residents benefited and left to buy larger houses elsewhere, leaving some houses in neglect. Massage parlors serving as brothels also sprang up in Spenard as workers surged into Alaska, she said.

“It was a harsh area,” she said. “I always looked at it and thought, why don’t we just fix some of this stuff up?”

Now, Cook Inlet Housing is doing that, she said.

“I’m impressed,” she said of the improvements, speaking as an individual and not as a member of the community council.

The new developments have led at least one property owner to invest in the area.

Ryan Callaway said he bought and upgraded a building in the area about six years ago to house his business, North Harbor Wealth Management, knowing that Cook Inlet Housing planned to make major investments in Spenard.

Encouraged by what he’s seen, Callaway said he’s now planning to construct a second building for his business at the site, at Minnesota Boulevard and 36th Avenue. His hope is that Cook Inlet’s efforts prompt other landowners to make improvements, and property values grow.

[Alaska house prices jumped last year to a record $389,000]

“I wouldn’t be comfortable building new offices if the area was on the decline as opposed to what I perceive as an upswing,” he said.

Anchorage developer J. Jay Brooks owns two trailer courts off Chugach Way. He said Cook Inlet Housing has made a “transformative” change to the area by bringing in quality, medium-density development.

“They’ve replaced a bunch of vacant, contaminated lots, and a hodgepodge of unsightly areas,” he said. “What they’ve done is a big benefit to the whole community.”

Ideas for more Anchorage housing

Cook Inlet Housing has operated since 1974. Before focusing on Spenard, much of its attention was centered on Mountain View in East Anchorage.

The agency has built 900 units across Anchorage over the last decade, Cook Inlet Housing officials said.

Shaun Debenham, a private apartment builder with Debenham LLC, said the agency is doing a great job replacing a portion of the city’s extremely dated housing, he said.

But Cook Inlet’s success also highlights the extreme shortage of apartments built in Anchorage by private developers, for people who don’t qualify for income-based housing, Debenham said.

Only a small number of market-rate apartments, with rents priced at the going rate, have been built over the last decade or so, Debenham said.

The land and construction costs are usually just too expensive, he said.

Debenham is building 48 market-rate apartments downtown, at the Block 96 Flats project that’s getting financial help from the Municipality of Anchorage. Plans call for rents between $1,500 to $1,800.

Debenham said Anchorage municipal planners have said the city needs hundreds of new apartments annually, of any sort. But that hasn’t happened in years.

The lack of housing is why Anchorage’s population and employment base has dwindled for years, he said. Meanwhile, the Valley — in the Matanuska-Susitna region — has steadily grown, he said.

“We need all types of housing to be a prosperous, industrious city,” he said.

Lee, the Sightline Institute researcher, said more flexibility in Anchorage’s building rules, such as easing minimum parking requirements, could help make apartment construction more affordable for private builders.

Adam Trombley, the city’s head of Economic and Community Development, said the city is looking at lifting minimum parking requirements in targeted areas, such as neighborhoods off Lake Otis Parkway, to provide more land for housing. Among other steps, it’s also looking to expand areas where temporary tax breaks are allowed. That could bring new development and rising values, increasing city property taxes long-term.

The mayor supports efforts like Cook Inlet Housing Authority’s that bring new housing, Trombley said.

“It’s a great revitalization for Spenard,” he said.