Assembly leans toward seeking public-private partners for mental-health building shells after abatement; full rebuild estimate climbs into millions

Kodiak Island Borough staff told the assembly on Feb. 27 that abatement and demotion work on two former mental-health apartment buildings is underway and that the borough now must decide whether to fund a design and full remodel, demolish the buildings, or pursue a public-private partnership to complete redevelopment.

"The demolition and abatement of the mental health buildings has been contracted and is currently underway," Manager Williams said. The contracted work removes finishes, plumbing, electrical and other systems down to studs and plywood sheathing, along with demolition of an adjacent mechanical laundry building and removal of one underground fuel storage tank.

The contractor and project team briefed the assembly on three options: 1) hire the contracted architect/engineer to design a remodel of the existing structures; 2) change scope and seek a contractor proposal to demolish the buildings entirely; or 3) demolish the buildings and rebuild under a new design proposal. Project staff emphasized the temporary nature of the current weatherproofing and said delays raise the risk of additional abatement costs.

Staff presented a rough order-of-magnitude remodeling estimate and a separate design proposal. Project materials included a design fee proposal of $415,910. Staff cited a top-line remodel estimate in the low millions—later clarified in discussion as approximately $9,500,000 for converting the existing shells into code-compliant housing. Assembly members reacted strongly to the cost estimate.

Assemblymember Sherritt and others urged that the borough not commit to an expensive borough-led rebuild without first soliciting public and private partners. Several members recalled prior interest from local businesses and recommended outreach to identify strategic partners willing to invest in completing the buildings while the borough retains title to the land. Manager Williams noted deed restrictions on the land that limit allowable uses and said any transfer or disposition would require federal review; he also said the borough holds roughly $4,787,173.04 in a local assistance and tribal consistency fund (ARPA) that is available without an immediate expiration date and could be considered for public-interest projects.

Engineering staff described the abatement scope already underway (including PCB testing) and said hazardous materials removed will have to be shipped off-island because no Alaska landfill accepts those materials at the tested levels. Preliminary estimates for moving some PCB material off-island were approximately $275,000.

No assembly vote authorized a full remodel or demolition on Feb. 27. Instead, the assembly asked staff to canvass community interest and to return with options, including public-private partnership proposals and clearer cost comparisons. Members repeatedly expressed reluctance to spend borough funds to be the long-term landlord or to commit $9 million-plus of public money without partners.

Manager Williams said staff will pursue stakeholder outreach and return with findings; several members suggested an initial 30-day stakeholder outreach period and a 60-day return to the assembly with results and possible proposals.