Anchorage’s downtown bus depot to reopen after decision to terminate hotel project

The Sixth Avenue bus depot in downtown Anchorage reopens Tuesday following a four-year closure, after a municipal entity terminated a deal with a private development team for a hotel project at the site.

The Anchorage Community Development Authority ended the deal with 6th Avenue Center LLC on Nov. 1, halting plans that called for construction of a 12-story hotel on Sixth Avenue between G and H streets, people involved in the project said.

The hotel project called for 242 units, including some for residential use. It would have been anchored against and supported by the eight-story 6th Avenue Parking Garage above the bus depot and mall. The authority owns the facilities.

The block has remained a bus stop in recent years, but passengers were forced to wait outside after the transit center was closed. The hotel deal’s termination means the transit center will once again provide an indoor space, away from the snow and rain, for the city’s main bus stop, officials said.

“It’s worth noting that this is something that the riders deserve,” said Bart Rudolph, acting director of the city’s Public Transportation Department. “An expectation of being a bus rider is having an indoor facility at our busiest bus stop, because we are a winter city, after all.”

The reopening of the transit center is unrelated to a separate effort that’s underway to find a permanent home for the transit center, Rudolph said. The options include remaining at the Sixth Avenue transit center, he said.

“That question is still unanswered,” Rudolph said.

The end of a deal

The development authority terminated the hotel deal because Sixth Avenue Center could not meet the deadline for financial obligations needed to move to construction, according to a Nov. 4 letter to the development team from Mike Robbins, executive director of the development authority.

The termination is regrettable, but the development authority is required to follow the deal’s contractual obligations, Robbins said in the letter.

It’s the second time that a deal for the hotel has fallen apart.

The original developer and the authority blamed each other for missed deadlines and excessive demands in 2020, contributing to the end of that effort. The global economic collapse caused by the pandemic also added to investor anxiety at the time, complicating plans for that project.

Larry Cash, founder of RIM Architects, along with a group of Anchorage-based partners revived the hotel project in 2021.

Their development proposal faced problems when interest rates began rising in 2022. The increased rates pushed borrowing costs much higher, adding more than $10 million in expenses and making the project economically unviable at the moment, Cash said in an interview Monday.

Cash said the total project estimate has jumped to nearly $100 million. It was pegged at $60 million in 2020 under the original developer.

“It’s heartbreaking,” Cash said. “The reality is that downtown has been in a gradual decline since COVID. It has recovered somewhat, at least stabilized, but it has a long way to go, and this project could have been a significant part of jumpstarting a rejuvenation of downtown, starting with the core.”

Cash said the development team sought to extend the development agreement and ground lease with the authority, to allow time for borrowing costs to fall.

The development authority agreed to an extension, according to minutes from the authority’s November board meeting.

But costs imposed by the authority, such as continuation of an $8,333-monthly delay fee, prevented the two sides from finding common ground, Cash said.

“We couldn’t afford to keep paying that,” Cash said.

The partners and other investors have sunk $4 million into the project already, he said.

“We were absolutely committed to seeing it to the finish line,” he said.

Cash said the development team unsuccessfully sought to find a compromise with the development authority over the delay fee and other terms.

“Our motive was to keep doing everything we could to keep this project alive until interest rates come back down to the point that the project started to become viable again,” he said. “And we believed, and still believe, that that will happen. But now that the project has been terminated, it can’t happen.”

Robbins said the development authority offered commercially reasonable terms for the extension. He said the door is not closed to Sixth Avenue Center.

“If they can re-approach us with a plan and complete the hotel development, we’re more than open to that,” Robbins said. “They put forth a valiant, strong effort to try to make this project happen, and they deserve recognition for that.”

With the project currently terminated, the authority is reassessing its redevelopment plans for the property, he said.

The bus depot

The vast majority of People Mover’s 14 bus routes stop at the transit center or nearby, Rudolph said.

Bus riders are excited about having an indoor waiting area once again, he said.

The newly upgraded waiting area will include indoor seating and restrooms for bus riders, he said.

The Anchorage development authority and the city’s People Mover bus system will provide enhanced security at the center, he said.

Unruly behavior, public drunkenness and drug use at the center caused the development authority about a decade ago to reduce the size and design of the transit center to improve safety.

Plans for the hotel construction that never materialized prompted the authority to close the transit center in 2020.

The customer service office was relocated a couple of blocks away, forcing some riders to walk in snow or rain to buy tickets, Rudolph said.

The reopened transit center will be open Monday to Friday from 6 a.m. to midnight and daily on weekends from 8 a.m. to 8 p.m., according to a description online from the public transportation department.

The customer service office will also return. Riders can buy tickets, apply for half-fare programs and recover lost items there.

People Mover will be the only tenant in the mall that once contained private businesses, said Robbins, with the development authority.

The security team for the development authority’s EasyPark parking operation was also moved to the site last year, Robbins said. That will contribute to the extra security at the reopened center, Robbins said.

“There’s been no issues with loitering or drug use or drunkenness or any of those kinds of things there for (about) eight or nine months,” he said. “And that’s really due to the increased patrols, because our goal is to make sure that it maintains its posture as a clean and safe place for transit riders.”