Two Anchorage housing votes on June 23: a tax break and new fees on the same new homes

Anchorage home prices rose 40 percent between 2020 and 2025. Current new construction averages over $650,000 — well above what most first-time buyers can afford. On June 23, the Anchorage Assembly will vote on two housing ordinances that try to do something about it. They pull in opposite directions on the cost of a new home.

The first, AO 2026-89, is the centerpiece of Mayor Suzanne LaFrance's "10,000 Homes in 10 Years" plan. It would give first-time buyers of new homes a 10-year property tax exemption — both city and school district taxes — if the home is priced at or below $496,746. That cap matches the average assessed value of an Anchorage single-family home this year and resets annually. For a qualifying buyer, the exemption could save tens of thousands of dollars over the decade. The idea is to get builders to build more starter homes, where Anchorage's housing supply is shortest.

The second, AO 2026-91, sits right next to it on the agenda. Anchorage Water and Wastewater Utility is asking to charge new construction more for hooking up to water and sewer lines: about $1.13 per square foot for water, $2.46 for sewer. That's about $5,395 in extra fees on a 1,500-square-foot home, or $7,193 on a 2,000-square-foot home. The "2025" label on the rates just means they're based on infrastructure AWWU built in 2025 — they would apply to future connections, not retroactively. The fees are billed to the developer, who passes the cost into the home's sale price.

Each policy has supporters and critics. Supporters of the tax break say any new starter homes help Anchorage's housing supply, and that a single-family tax break is easier to pass politically than direct subsidies for apartments or duplexes. Critics say the tax break only works if builders can actually build a home for $497,000 or less and still turn a profit. They also note that single-family homes are the most expensive way to add housing per unit — apartments and duplexes fit more people per dollar of investment.

Supporters of the connection fee say new development should pay for the new water and sewer lines it needs, rather than passing those costs on to current customers. Critics say per-square-foot fees hit smaller, cheaper homes hardest — the same starter homes the city is trying to encourage. The administration calls the tax exemption "largely revenue-neutral." AWWU calls the connection fee a "fairness mechanism."

So how do they add up for a real Anchorage buyer? Take a first-time buyer of a 1,500-square-foot new starter home. The tax exemption saves them tens of thousands over a decade. The utility fee adds about $5,395 to the purchase price up front, baked into the mortgage. For that buyer, the net over time is favorable.

Whether the two policies work together to make housing more affordable, or roughly cancel each other out for many buyers, depends on how you read them. Both go to the Assembly June 23.