Assembly directs $11.8 million in federal relief toward possible Anchorage hotel purchase for low-income housing

The Anchorage Assembly has finalized how the city will spend $51 million in federal relief funds, giving the largest chunk, nearly $11.9 million, to the Rasmuson Foundation for the purchase of low-income and supportive housing units. It identified the Aptel Studio Hotel in northeastern Anchorage as the likely building.

The project is among more than 65 that the Assembly approved federal funding for this week, prioritizing efforts to support housing, children and families, economic development and workforce development. The federal funds came via the American Rescue Plan Act, a $1.9 trillion relief bill meant to help mitigate impacts of the COVID-19 pandemic.

The city spending package, finalized Tuesday, comes as the city faces a crisis of unsheltered homelessness. An estimated 350 people live unsheltered in Anchorage, and shelter and housing programs are largely full. Walk-in, low-barrier shelter no longer exists — the only option is camping outdoors at Centennial Park Campground, where Mayor Dave Bronson’s administration directed and bused homeless people as it shut down the city’s mass shelter at Sullivan Arena in June.

In a last-minute switch, the Assembly directed the money for the hotel to Rasmuson instead of the Alaska Community Foundation, as previously planned. The move cuts the city — and Bronson’s administration — out of the deal entirely. The community foundation would have needed signatories to release the money for the purchase, and that would require the administration to sign.

The voting-bloc majority of Assembly members say Bronson’s actions have created a humanitarian crisis at Centennial, and that they have little, if any, faith in the administration’s competency.

“I would prefer that this funding went to the health department and to the administration,” Assembly member Kameron Perez-Verdia said. “But we clearly see that their lack of planning and lack of ability to move forward on these projects forces us to go directly to community partners and to go to people that we know will make this happen.”

[More coverage of Anchorage homelessness]

Bronson opposed the spending and giving money to the Rasmuson Foundation for the hotel purchase. The mayor vetoed the change at Tuesday’s Assembly meeting, and the Assembly immediately voted to override his veto.

“We’re supposed to allocate nearly $12 million of taxpayer money to the Rasmuson Foundation — which has always been a great partner in all things in Anchorage — but the question I have, one of the questions I have of several, is that normally it goes the other way. The Rasmuson Foundation gives us money,” Bronson said.

Bronson said he would prefer to spend the money to pay for fuel costs for police, fire, public transit and other city vehicles. Several of the city’s departments have already exceeded fuel budgets for the year due to record-high gas and diesel prices.

The Assembly voted down a separate proposal from Bronson to reduce or cut entirely the funds for multiple projects and instead spend $3.2 million on fuel budgets and $2.5 million on repairs to Sullivan Arena, which was damaged during the more than two years it functioned as a mass homeless shelter.

Assembly members have said the city has other sources of money it can use to pay for fuel and arena repairs.

The Assembly also removed language that referenced the Aptel hotel, making the funds given to Rasmuson available for standing up low-income housing elsewhere if needed.

That concerned Bronson and the Assembly members allied with him. They also spoke against the spending, citing concerns that the deal could fall through and that no entity had yet been identified to own and operate the housing project.

“There’s too many unknowns here. Can’t we nail these down? This is a business transaction. I need to see a business plan,” Bronson said. “Who’s going to operate this thing 10 years from now? I mean, is this gonna fall back on the taxpayer?”

Michele Brown, senior fellow with the Rasmuson Foundation, said the operations would largely be covered by the rent paid by residents, which will include housing vouchers and other assistance. They will also seek federal HUD funds through the city and grants and donations to cover costs.

The foundation plans to also spend its own money on the purchase, but will not own the building. The funds will go from the Rasmuson Foundation to a designated entity that will ultimately own the property. The foundation will coordinate the project and purchase among the funders and prospective owner and operator, which have not yet been selected.

Several Assembly members scoffed at Bronson’s criticisms and pointed to a $15 million request he made last summer to construct a 450-bed homeless shelter and navigation center in East Anchorage, designed with a surge capacity of up to 900 people. The Assembly quickly nixed the idea at the time.

“The mayor put that forward without an operating plan or a planned operator, just like he now accuses the Assembly,” member Forrest Dunbar said. “... We also know that the mayor set an arbitrary date of June 30 to close the Sullivan Arena and created a humanitarian crisis that is now unfolding in Centennial Park.”

The city is currently moving forward with a plan to build a much smaller shelter and navigation center in East Anchorage, but the administration has said it won’t be completed until late January at the soonest. It has not yet identified an operator, or exactly how the operations will be funded, or exactly what services will be provided there. The Assembly has so far approved $9 million for the project, which will continue to need more funding.

“Some of us are still waiting for a plan for the navigation center,” Assembly Vice Chair Chris Constant said.

Bronson and Assembly members allied with him also said they were concerned that such a large chunk of money would go directly to Rasmuson, a private entity. Assembly members shot back saying they distrusted the city with the funds.

Rasmuson has been deeply involved in designing and implementing the city’s homelessness plans. It and other private organizations have donated millions to city homelessness efforts.

Bitter clashes between the Assembly and administration over Bronson’s initial East Anchorage shelter proposal led them to enter into negotiations with facilitators to come up with homelessness plans. Agreed-upon plans were formed as the city sought to shut down its COVID-19 era mass care operations for the homeless, including Sullivan Arena. However, that nearly yearlong negotiation broke down in June.

The Assembly had already directed $3.4 million of the federal relief money to secure the purchase of the GuestHouse Inn, which is being used by the city as a transitional housing complex. The property is set to be converted into 130 workforce and permanent supportive housing units after the sale to First Presbyterian closes this month.

The GuestHouse purchase was a part of the negotiated plan. Assembly members and others involved in the negotiations say the administration and Anchorage Health Department bungled the planned-upon funding process for that purchase. (The mayor’s office on Friday said it was unable to immediately answer questions about the GuestHouse funding. It has not responded to previous questions on the matter.) That put the sale at risk, along with the 132 people living there at risk of losing their shelter.

The Assembly spent the ARPA money to ensure the purchase moves ahead.

The GuestHouse and Aptel Studio Hotel are part of a broader Assembly strategy to help address a homelessness crisis ahead of winter.

The city and Rasmuson Foundation worked together to purchase the Sockeye Inn earlier this year. Its purchase was planned during the negotiation process, and it is now a homeless shelter for medically fragile people, run by Catholic Social Services.

On top of the hundreds living unsheltered in Anchorage, an additional 200 homeless residents are staying at the Aviator Hotel. That operation ends Sept. 30.

“That’s another 200 people that are going to be put out on the streets. So we need additional housing space,” Dunbar said.

To choose how to distribute the federal relief funds, Assembly members reviewed more than 130 applications for portions of the money from nonprofits, businesses and organizations in the city, totaling $262 million in funding requests.

Here are a few of the other biggest items that received federal funding:

• $8.165 million to thread, a child care resource and referral network. The organization will distribute money to licensed child care programs to stabilize the businesses, to recruit educators and to provide affordable child care.

• $4.5 million in grant funds to Cook Inlet Housing Authority to develop 64 units of affordable housing.

• $2.375 million to Covenant House Alaska for Covey Academy, its vocational training and workforce housing project, which provides training and job placement to disadvantaged populations, including homeless youth.

• $1.9 million split between the Volunteers of America, Alaska Behavioral Health and Christian Health Associates for expanding mental health services in schools

• $1.6 million to Girdwood Inc. toward building a new child care and learning facility.

• $1.2 million to the Alaska Black Caucus to renovate its building and create an equity center as a service hub for the BIPOC community.