Anchorage Assembly to weigh extending mixed-use housing tax break to rental units

Midtown Assembly member Erin Baldwin Day has proposed letting Anchorage commercial property owners who add four or more rental units qualify for a city property tax break. Her substitute to Mayor Suzanne LaFrance's mixed-use housing ordinance goes before the Anchorage Assembly at a reopened public hearing Tuesday, Nov. 17.

LaFrance introduced the ordinance in June as part of her 10,000 Homes in 10 Years plan. As first written, it offered a 10-year tax break only for units sold to owner-occupants, such as condominiums above office or retail space. A mayor's office memo said the goal was to add housing and revitalize aging commercial buildings from the 1970s and 1980s, and that the city's existing multifamily tax incentive excludes owner-occupied units.

Baldwin Day's version, which lists her and LaFrance as sponsors, opens a path for owners who add units "for purposes of renting the units (rather than selling them, as the original and S versions currently provide)," she wrote in her memo to the Assembly.

It does that by changing the existing multifamily incentive, which requires at least eight new units. The amended text would also allow four new units in a mixed-use property, with no more than one unit for owner-occupancy.

The rest of the ordinance keeps the mayor's plan: a 10-year break on the residential portion of new or rehabilitated mixed-use buildings with at least four new units sold at or below the city's average assessed single-family home value. The mayor's office put that value at $496,746. Short-term rentals of less than 30 days would not qualify. Applications would close Aug. 31, 2031, and service areas with elected boards could opt out within 60 days.

The ordinance says average listing prices in Anchorage rose 40% from 2020 to 2025. The city estimates it needs 9,600 more housing units over the next 10 years.

The city's first economic analysis called the ordinance revenue-neutral. A later analysis of the earlier substitute estimated revenue losses of $100,000 to $1 million over five years. Neither covers the rental change. At an Oct. 16 budget work session, Nolan Klouda of the mayor's office said of the city's multifamily tax break: "We're forgoing revenue on something that otherwise wouldn't have been built in most cases."

The Assembly held an earlier hearing and postponed action Sept. 15. The ordinance would take effect immediately if passed, and voters could repeal it by referendum.

The hearing reopens at 6 pm Tuesday at the Loussac Library. In-person testimony needs no sign-up. Phone or written testimony requires a public testimony form by 5 pm Monday, Nov. 16.