Councilman Clark’s suggestion to offer the Polaris Building to the highest bidder who will demo the building clearly represents the community’s frustration with trying to get rid of this eyesore.
As I understand the proposal, the successful bidder would be required to demolish the building within three years, and once the building is demolished the successful bidder would receive title to the land, along with $2 million.
In 2016 when Councilman David Pruhs asked if I would serve as a volunteer member of the Polaris Working Group, I eagerly joined the effort. The goal was to find a way to tear this building down and jumpstart downtown revitalization. As a member of the group for these five years, I am very familiar with the building and the costs to abate hazardous materials and demolish the structure. These estimates have been developed by reputable consultants with great experience in building cleanup and demolition. The estimated cost as late as 2019 was on the order of $10 million.
While the Polaris Working Group was engaged in this effort, the prior owner defaulted on the borough property taxes, and with the advocacy of Polaris Working Group, the community raised funds to pay the borough the back taxes, and thereby secured ownership, allowing the property and building to be donated the city of Fairbanks. At the time, the city was seen as the most likely body capable of achieving the goal of demolishing the building as a first step in revitalization of the downtown area.
Assuming the 2019 estimates are reasonable (note: They do not consider the recent increase in construction related costs), the economic reality for a respondent to a city of Fairbanks RFP to demolish the building and gain ownership would be as follows:
The cost of the land alone, after receiving the $2 million from the city, would be $8 million, or approximately $450 per square foot. This is a land cost only seen in thriving urban centers in the Lower 48. For reference, typical downtown Fairbanks commercial property is now assessed at approximately $11 per square foot.
To amortize this land cost, the net revenue generated by any enterprise would need to be on the order of $500,000 per year. This is before any kind of structure was built which could generate this revenue.
Finally, we all know that the economics of commercial real estate is changing rapidly, what with a digital economy and the pandemic-driven “work from home” model. Empty commercial real estate (offices and retail) is prevalent throughout the country as well as right here in Fairbanks.
In sum, while I applaud the effort, this idea is uneconomic, even in the best of times. In my mind, if the city of Fairbanks even had $2 million to spend on this project it would be better spent as a match to a federal grant or loan program to demolish the Polaris and redevelop the site.
Architect Charles Bettisworth is one of the original members of the Polaris Working Group.