The state says it must tear down a former Government Hill convenience store. The neighborhood is fighting to save it.

Just over the bridge that leads into Anchorage’s Government Hill neighborhood, a boarded-up convenience store building surrounded by chain-link fencing dominates the view at the intersection of East Loop Road and West Hollywood Drive.

For dozens of years, convenience stores have operated there, selling liquor, pantry staples, grocery and household items. It offered the most variety of food and was generally the only quick option for the area’s residents to buy food to cook.

That property has been empty since the end of June. And the leaseholder, the Alaska Department of Transportation and Public Facilities, wants to tear it down — for a dormant and unfunded billion-dollar state project to build a bridge across Knik Arm.

Early last month, DOT applied for a change in terms for its lease of the property, in order to demolish the building and clear the land.

Neighborhood residents, the community council and Assembly members are fighting that proposal. They say the state has an obligation to get a convenience store back in the building, citing a stipulation in DOT’s long-standing lease with the property’s owner, the Alaska Railroad Corp.

That agreement requires DOT to maintain it as a gas and convenience store, unless the railroad approves a change.

The Anchorage Assembly and Government Hill Community Council have each passed resolutions calling on the railroad’s board of directors to enforce the current lease and reject DOT’s request.

Both said the store’s closure would have serious negative impacts: It limits food access for residents in the somewhat isolated neighborhood — especially for low-income families and those who rely on public transportation. The abandoned building is an eyesore at the community’s entrance and its business district’s main intersection, they’ve said. They’re also concerned the empty, boarded-up property will attract nuisances.

“Attempting to back out of this portion of the agreement is essentially requesting to turn Government Hill into a food desert,” Assembly member Daniel Volland, who represents the neighborhood, said in an October email to a DOT official.

Despite the Knik Arm project’s cancellation, DOT “evicted the tenant operator of the convenience store and moth-balled the building with fencing and plywood, violating the terms of the lease and the trust of the community,” said the Assembly’s resolution, sponsored by Volland and Assembly Vice Chair Chris Constant, who also represents the area.

DOT says the corporate owners of the store chose to close it and settled with the state, and that it can’t force a business to operate there.

It also says the property is the last one it needs to demolish in order to close out the right-of-way process it had underway when the Knik Arm Crossing project was suspended in 2016.

Not completing the phase could force the state to repay more than $7 million to the Federal Highway Administration, all federal funds used for securing right-of-ways for the project, DOT spokesman Justin Shelby said by email.

The neighborhood still has food access, he said, with a liquor store and a comparable mini mart a few blocks down from the empty building.

“DOT&PF have honored the lease agreement and are still honoring it. The lease agreement does not obligate DOT&PF to operate a convenience store, and the use clause indicated the existing use of the property,” Shelby said.

But the Government Hill Community Council disagrees, pointing to the lease documents. The railroad agreed to the lease with DOT because it is “subject to the continued use of the .. .premises as a gas station/convenience store for as long as the lease remains in place,” according to the assignment of lease.

Impacts

While it may seem strange a neighborhood would be up in arms about the loss of a corporate chain convenience store, residents point out it has already undergone a series of major changes because of the defunct bridge project.

On Wednesday afternoon, Government Hill Community Council treasurer Susanne DiPietro and secretary Peter Partnow pointed toward another empty white building that once held a piano shop. Behind it is land where the Sourdough Lodge once stood, torn down for the Knik Arm project.

A community orchard of fruit trees now grows there, cultivated by residents. A large mural is painted on an adjacent building in the plot of land, now known as the Commons.

Across from the orchard, two houses were razed. The area is bare, save the snowed-over grass.

“This whole area has been impacted by the Department of Transportation’s decision to hold all this property in right of way,” DiPietro said.

Sola said residents “fought and fought and fought” to raise the hundreds of thousands they needed to create the Commons.

“It’s so discouraging to our neighborhood to have all this community effort going into improvement and placemaking and community building, and then to have this bustling, vibrant, you know, important convenience store just boarded up and chain-linked,” DiPietro said.

[The pandemic years changed shopping in Anchorage. Maybe forever.]

Government Hill is divided from downtown and bordered to its south by Ship Creek, surrounded by Joint Base Elmendorf-Richardson to the north and east and by Cook Inlet to the west. The nearest grocery stores are a car trip or bus ride to other neighborhoods, like New Sagaya in South Addition or Carrs in Fairview, both miles away.

The building for years was a Tesoro gas station and convenience store. Most recently, it was a Speedway chain store, a subsidiary of 7-Eleven, selling liquor, groceries, snacks and hot prepared foods.

Community Council president Jody Sola said tearing it down doesn’t make any sense, because the Knik Arm Crossing isn’t currently funded. And it’s possible the project never will be — at least not anytime soon, she said.

“If it’s going to sit empty for the next 20 years, why not have a viable business in that corner?” she said.

Questions about the state’s lease

In 2014, the Alaska Railroad Corp. leased the parcel to the state’s transportation department as it sought to acquire right-of-way properties for the Knik Arm Crossing. That lease runs through October of 2040. The state also acquired right-of-way for other properties.

DOT at the time said it would continue subleasing the property as a convenience store and gas station until the land was needed for the project, and said it would then ask to buy the property, board documents show.

But last month, DOT applied to the railroad for a lease amendment that would change the property’s designated use, in order to raze it. Whether that will ultimately be granted is up to the railroad’s board of directors.

DOT is not currently pursuing its purchase, according to Shelby.

“If DOT&PF did not have the intention to honor what was specified in the lease ... they never should have entered into that lease,” Volland said last week, just before the Assembly passed its resolution urging the railroad to deny DOT’s request.

[In East Anchorage, families and neighbors reckon with the potential closure of a beloved elementary school]

The convenience store’s closure affected lower-income residents and people without vehicles the most, Partnow said.

“There is no comparable store nearby where residents can buy a variety of food items without a car,” the community council resolution said.

Down the hill to the east are high-density apartment complexes. Residents there particularly depended on the store, as did JBER personnel, the council’s resolution said.

DiPietro and Partnow are both longtime residents of the neighborhood, Partnow for 10 years and DiPietro for nearly 30. They recalled once being able to buy gas at the Tesoro, which shut down its fuel operation in 2014. Now residents must drive miles to buy gas.

The state required that it replace underground storage tanks at the time, according to DOT’s application for a lease change.

Tesoro had planned to replace the tanks, a corporate official said in 2014. After it learned the lease was being transferred to DOT, Tesoro nixed the investment in the property. Later, Tesoro was acquired by Marathon Petroleum, and the store was rebranded into a Speedway.

Then, after 7-Eleven acquired Speedway this spring, the corporation chose to close the store due to the lack of pumps, the store’s small footprint and low traffic volume, Shelby said. Federal funds for the project’s right of way phase were used to settle the lease termination.

Railroad board to decide

On Wednesday, the three community council leaders testified to the railroad board of director’s real estate committee.

DiPietro said DOT needs to make a good-faith effort to find another tenant before it would be appropriate for the board to consider the lease change.

“I don’t think we know anything about who else might be wanting to, who might be willing to come in and use that store as a convenience store,” she said. “I certainly don’t know anything about any efforts the Department of Transportation has made.”

Shelby said that 7-Eleven told DOT that it didn’t want to continue operating a store there and negotiated a settlement with the state to end its lease. But it didn’t respond to DOT’s inquiry about when it would close and move out. Without a response, “it became incumbent upon the department to set a date certain for vacating in order to continue efforts to close out the project,” Shelby said.

Because DOT already used federal money to settle with 7-Eleven, if DOT ever needs the property, the state would have to foot the bill in order to oust the business, under relocation assistance and property acquisition law, Shelby said. That’s “not a responsible use of state funds,” he said. “Essentially, we can’t have another occupant at that location.”

And DOT only offers short-term leases with a maximum of a five-year term. “Even that can be canceled if the state needs the property. Where the situation worked for an existing business already in place, it is not attractive to a new business going into operation,” Shelby said.

DiPietro, Partnow, Sola and the area’s Assembly members say the unappealing situation essentially amounted to the state’s “eviction” of the convenience store — and that DOT later enforced the store’s closure on July 1.

With no future funding for a Knik Arm Crossing in sight and 18 years left on the state’s lease, the community council leaders say DOT should be able to make an exception and offer more secure sublease terms for a prospective store operator.

On Wednesday, DOT Commissioner Ryan Anderson asked the committee to delay making a recommendation and to hold off on a board decision, which was scheduled in mid-November. He said DOT would then be able to provide more information and answer community questions.

The board agreed, and has not yet set a date to decide whether the transportation department can tear it down.

Shelby said the change to the lease DOT has requested is “a formality that was fully anticipated from the beginning,” when the railroad agreed to lease the property to DOT.

DOT plans to work with the community to create another space there for community activities, similarly to The Commons, he said.

For those who have watched pieces of the neighborhood torn down for a project that appears unlikely to be built, and who have worked hard to fill the scars it left, that proposition seems a hollow resolution.

“Now they’re telling us we get to start all over again, and do something else,” Sola said. “It’s not right that we have to do that.”

Correction: A previous version of this story included an incorrect spelling of Susanne DiPietro’s name.