Large housing development may be coming to Eagle River after deal between city and Eklutna Inc.

Many more housing units may be coming to Eagle River as a result of a development deal between the Municipality of Anchorage and Eklutna Inc.

The plans are the result of a long-running saga between the city and Eklutna, an Alaska Native Claims Settlement Act corporation that is the largest private landowner in the municipality.

An initial tranche of 20 new homes was recently announced by Mayor Dave Bronson’s administration, but Eklutna says the area under development has the potential to eventually add up to 1,000 new units to the city’s housing stock in the future.

The mayor touted the news in light of a significant increase in rental costs and home prices in Anchorage in recent years. Lagging construction of new homes spurred members of the Assembly to propose major land-use and zoning reforms over the last several months.

“I am grateful to everyone at Eklutna for working with the Municipality over the years to get to an agreement that is best for everyone,” Bronson said in a statement. “We have struggled to keep up with building demands over the years and that has contributed to a housing shortage and lack of affordable housing.”

For years, Eklutna was in a dispute with the city over proceeds from methane gas captured at the Anchorage landfill, which the municipality sells for energy generation at Joint Base Elmendorf-Richardson. In 2017, under then-Mayor Ethan Berkowitz’s administration, the parties reached a settlement, with the city paying $5.75 million to Eklutna and the corporation agreeing to construct 108 housing units on land it owns west of the Glenn Highway in Eagle River.

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But in the years since, progress has hit roadblocks. One major barrier was sewer lines. Under the 2017 agreement, the municipality promised to make a good-faith effort to extend major trunk lines for water and sewer service through its public utility, but the costly upgrades remained unresolved.

What finally allowed the plan to move ahead was a 2021 land swap with the Alaska Railroad Corp. that gave Eklutna control of a parcel called Powder Reserve West, which sits significantly closer to existing infrastructure like water and sewer lines to the west of downtown Eagle River. Eklutna took possession of the Powder Reserve West tract in exchange for 160 acres near the Birchwood Rail Yard, traded to the Alaska Railroad Corp. under a deal reached in 2021.

In October, the Eklutna and the city jointly announced they had amended the 2017 deal, clearing the way for a minimum 20 housing units to be built in the area. They will be connected to existing utility infrastructure at the parcel’s boundary. Later, outside funds are expected to largely pay for expanding pipes and substations in order to accommodate future development.

“Amending the agreement sets the stage for Eklutna, Inc. to begin preparations for the largest, multi-phase housing development in Anchorage. We are confident the Powder Reserve West project will help fill the pressing housing needs facing our city,” said Kyle Foster, Eklutna Inc.’s chief executive officer.

The Powder Reserve West tract has infrastructure capacity for as many as 1,000 housing units, according to Kyle Smith, Eklutna Inc.’s director of land agreements, though the corporation is still in the early phases of figuring out plans for future construction.

“With a 400-acre parcel, there are many aspects of the development to consider,” Smith said. “We are starting initial site studies this fall. As part of those studies, we are trying to determine if we can break ground on some aspects of the development in 2024.”

Though the newly announced terms for the development deal are a significant departure from the original agreement, the city and corporation say the adjustment is a way of moving forward.

“Both parties believe that the spirit of the settlement agreement is better served by a different development than the originally designated Powder Acres and Powder Hills,” the updated settlement reads, referring to the two tracts specified in the original agreement.

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Another factor nudging prospective projects forward is federal money. The Anchorage Water and Wastewater Utility is counting on a Congressionally Delegated Spending Grant Fund Award directed through U.S. Sen. Lisa Murkowski’s office to be disbursed in 2024, according AWWU Director Mark Schimscheimer.

“This award of $4.5 million is intended to allow for the upgrade of sewer lines and related infrastructure that will be capable of handling all flows generated at (a) full build-out of Eklutna Inc.’s Powder Reserve West development,” Schimscheimer wrote in an email.

Murkowski serves as a senior member of the Senate Appropriations Committee, which, as part of the annual budget cycle, awards requests for Congressionally Directed Spending grants, known previously as earmarks.

After receiving the money, AWWU anticipates full construction of extended water lines would take around four years.

“Nonetheless, there is currently adequate AWWU infrastructure in place for the development and construction of hundreds of homes,” Schimscheimer said.

Costs for those infrastructure improvements will not be passed on to Eklutna Inc.

Smith said the corporation’s residential construction subsidiary, Eklutna Construction and Maintenance, is not anticipating doing any work in the first phase of development, but may consult on multi-family or commercial projects at the parcel in the future.