Petersburg Medical Center weighs $10 million apartment building to house its staff

Petersburg Medical Center already rents out nearly two dozen apartments to its own staff, and it doesn't expect the need to shrink. Now the hospital is weighing whether to build more housing, and the biggest option on the table would cost about $10 million.

Architect Austin Weaver showed the hospital board a three-story building of 20 studio apartments with a shared lobby and laundry on the hospital's Lot 2 property. "It averages out to about $500,000 a unit," Weaver said. That doesn't include building a road or extending utilities to the site.

He also presented a much smaller option, a duplex that could become a triplex if its garages were dropped. Anything larger would need fire sprinklers under state fire rules, Weaver said, and he estimated sprinklers would add $200,000 to $250,000 to the 20-unit building.

The board didn't pick a design. The hospital manages 23 staff apartments, housing workers from nursing and therapy to food service, radiology and behavioral health. It spent about $358,000 on staff housing in 2025 and rented an average of 22 apartments, according to a borough meeting record. Administrator Phil Hofstetter has asked the board to treat housing as a limit on how many workers the hospital can hire and keep.

State money could cover only a sliver of the cost. The hospital's new grants administrator said it could apply for up to $700,000 from the Alaska Housing Finance Corporation's Rural Professional Housing program, which requires the hospital to put up about $123,000 of its own. Applications are due Nov. 6, according to AHFC. Hofstetter said applying wouldn't commit the hospital to building, and that he wants a project the hospital can see through to completion.

Before building anything, the board chair asked for a study group to plan how the hospital should use its land over the long term, noting that the cost of streets and utilities could push the project to another site. Hofstetter agreed to draft a plan. The board meets next on Oct. 29.