What once was the site of a notorious strip club is now a 33-unit mixed-use, mixed-income development in Anchorage, Alaska.
Papa Joe’s, or PJ’s, opened as a gentlemen’s club in 1969 in the Spenard neighborhood, which had been known as the red light district during Alaska’s oil boom. PJ’s transformed into a strip club and then continued to operate as the neighborhood around it started to change.
When U.S. marshals seized the strip club for illegal activity in 2009, local housing provider Cook Inlet Housing Authority (CIHA) purchased the site, which neighbors its offices, at public auction to transform it for the better.
“Spenard is a unique neighborhood. We don’t want to change the uniqueness and grittiness that is part of its history. We definitely want to enhance it and change the negatives,” says Sezy Gerow-Hanson, director of public and resident relations at CIHA. “We want to be part of what is happening in the neighborhood. We are activating space that was vacant and blighted.”
To make its 3600 Spenard development a reality, CIHA purchased and remediated an adjacent site that once housed a gas station and was causing groundwater contamination, acquired the surface parking for the site, went through a replat process, and demolished the former strip club.
KPB Architects created a building design that would fit the oddly shaped site, meet codes, and maximize the number of apartments.
The development, completed in September 2017, includes 20 units for households earning 50% of the area median income (AMI), five units for households earning 60% of the AMI, and eight market-rate units. It also features space for CIHA subsidiary Cook Inlet Lending Center, which specializes in homeownership loans, and an upcoming retail store.
3600 Spenard has been an important addition to Anchorage’s housing stock. The demand for the 33 one-bedroom units was strong, with the development leasing ahead of schedule.
While the population has grown in Anchorage over the past 15 years, very little market-rate rental housing has been built because of the substantial gap between what it costs to build that type of housing and the debt a project can support and the stock of rental housing built in the 1970s during the pipeline boom has begun to deteriorate, according to Jeff Judd, executive vice president of real estate at CIHA.
“Lesser quality and no new development has created a situation where decent affordable housing is really in short supply,” Judd says.
Financing for the nearly $10.4 million development includes low-income housing tax credits allocated by the Alaska Housing Finance Corp. R4 Capital provided the tax credit equity through a proprietary fund with Anchorage-based Northrim Bank. Northrim provided the construction and permanent financing through a pass-through loan from the Federal Home Loan Bank of Des Moines, which also awarded an Affordable Housing Program grant. The state provided Supplemental Grant Program funds, a demolition grant, and energy tax credits. Additional sources included funding through NAHASDA, a grant from the Rasmuson Foundation, and a loan and deferred developer fee from CIHA.
With higher building costs in Alaska—at least 50% more expensive to build there than it is in many parts of the western United States, according to Judd—CIHA focuses on finishes and materials on the exterior and interior to control longer-term operating costs.
In addition, two alternative energy systems were incorporated into the design. Geothermal wells, which were drilled under the parking lot, provide heating and cooling in the residential units through a closed, vertical loop field and heat pump exchange system. On the rooftop, 70 solar photovoltaic panels have been installed to offset electrical expenses for common areas and outdoor lighting.
“It’s turned out to be a great project in a midtown location that hasn’t seen new construction in decades,” adds Judd.