New documents have emerged in Seward showing that a $1.6 million earmark in 2005 by Sen. Ted Stevens was engineered so it would lead to the purchase of property owned by his former aide, Trevor McCabe, an Anchorage fisheries lobbyist.
The public records show that another Washington lobbyist who once worked for Stevens, Brad Gilman, acted as the go-between in the deal, connecting an unnamed "Senate aide" with Gilman's two clients in Seward: the city and the Alaska SeaLife Center, a federally supported marine research center and tourist attraction.
Gilman reported that the Senate aide was shopping for an entity that would guarantee the purchase of McCabe's property if it got the earmark, the documents said. Federal agencies had rejected previous attempts by McCabe and two partners to develop or sell the property, site of a derelict building, for a government visitor center and office complex.
The result was the sudden shift of the earmark by Stevens' office from the City of Seward, which wouldn't promise to buy the property, to the Alaska SeaLife Center, which had more discretion, according to a phone log written by a Seward official and minutes of the SeaLife Center board.
The backdoor arrangement described in the documents appeared to assure that a money-losing real estate venture by the partners would be bailed out by U.S. taxpayers without any need for the earmark itself to be explicit about its intent. As passed into law, the public language of the legislation only spoke vaguely about "various acquisitions."
The Seward land sale is under investigation by the FBI and inspectors general from two federal departments, Interior and Commerce.
Roy Keim, a spokesman for the Interior Department inspector general, said in a telephone interview from Washington last week that there was no sign the investigation would wrap up soon.
"These things take a long time," he said.
REAL ESTATE MISTAKE
Flush with the unexpected grant, the SeaLife Center bought the property for $558,000 in 2006. The only partner to agree to an interview, Seward businessman Dale Lindsey, said before his death from cancer in November that it was no windfall. He lost about $23,000 and lots of sleep on the venture, he said.
"It was probably the worst real estate deal I ever got myself involved in, when I stop and reflect back on it, even absent all the publicity," said Lindsey, concerned about how people would remember him in the town he played a strong role in building. "It just was a bum deal from the start."
Gilman didn't return numerous calls placed to his office in Alexandria, Va., where he works for Robertson, Monagle and Eastaugh, the Juneau-based law and lobbying firm. McCabe's attorney, Michael White of Seattle, said, "Trevor has been instructed by his lawyer to continue to cooperate with investigators and make no public comments." The third partner, Anchorage office building owner Steve Zelener, didn't return several calls seeking comment.
A spokesman for Stevens said the senator wouldn't comment, following an office policy in effect since Stevens came under scrutiny in the corruption investigation in Alaska. In a Daily News interview on the Seward land deal in early 2006, before the Gilman conversation was known outside of a few city officials, a Stevens spokeswoman said the earmark "was not at Trevor McCabe's request or on behalf of Trevor McCabe." The grant came with no strings attached, the spokeswoman said.
SeaLife Center executive director Tylan Schrock, who announced two weeks ago he would leave his post later this year, said in interviews earlier this year and last year that the SeaLife Center had no obligation to buy McCabe's property with the grant, and asserted that the decision to buy it was the center's alone. He has not returned calls since the City of Seward released the records of its calls with Gilman.
The Alaska SeaLife Center has long been a favorite of Stevens, who has steered more than $50 million in federal funds to the nonprofit facility since it opened in 1998, including more than $3.5 million in the most recent appropriations bills. Schrock has been executive director for more than seven of those years.
McCabe, who worked eight years for Stevens in Washington, D.C., also has close ties to the marine facility. He is a past board member and helped provide financial backing when he was head of the At-Sea Processors' Association, a factory trawler group.
The documents were obtained by the Daily News under a public records request to the Seward city administration. The SeaLife Center had earlier refused to provide the board and executive committee minutes, saying they were confidential, despite the organization's status as a nonprofit and its overwhelming reliance on public funds. The city, which has a representative on the board, reached the opposite conclusion and released its copies.
The SeaLife Center appeared in the documents as a compliant partner to the wishes of the unnamed Senate aide, as expressed by Gilman. The city, required to engage in a public process before purchasing real estate, could offer no assurances that it would buy the Arcade property with the money, the documents said.
LEFTOVER MONEY
The $1.6 million represented money left over from an earlier Stevens earmark to the National Park Service to purchase land for a federal center in Seward. The original earmark required the remaining funds be handed over to the city for waterfront development and beautification.
Instead, as the federal budget emerged in July 2005, city officials discovered the money had been redirected to the SeaLife Center "for various acquisitions, waterfront improvements and facilities that complement the new Federal facility."
Seward's mayor and its city manager asked another city official to call Gilman to see whether he could explain what happened.
The telephone log provided by the city to the Daily News doesn't name the Seward official who spoke with Gilman. City manager Phillip Oates, hired in March 2007, said it was assistant city manager Kirsten Vesel. She declined to comment.
Oates said the log was written sometime after the call from contemporaneous notes taken by Vesel.
According to the log, after some rounds of phone tag, the Seward official reached Gilman on July 27, 2005. Gilman told the city official that "a senator's aide" had called him prior to the emergence of the new earmark.
The aide, according to the log, asked Gilman whether the city could assure the purchase of the Arcade property with the funds.
"Mr. Gilman told me that he could not assure the senator's aide that the city could guarantee the purchase of any property," the log said.
The Seward official agreed with Gilman's analysis and told him so, the log said. "I concurred and said that all city property acquisitions have to go through a public process, so Administration cannot assure anything."
What about the Alaska SeaLife Center, the aide had asked Gilman, according to the log.
"Mr. Gilman told me that he was put in a difficult position because he represents the City and the ASLC," the log said. "However, he answered to the best of his ability."
Gilman's advice: "Mr. Gilman then told the Senator's aide that he thought that Tylan Schrock, executive director of ASLC, had more discretion and may be able to commit to this request. He recommended the aide call Tylan Schrock. Mr. Gilman then told me that he did not know that this conversation would lead to the transfer of the funds and was just as shocked as we were," the log said.
CONVERSATION WITH 'DC'
Minutes of the SeaLife Center's quarterly board meeting of July 22, 2005, corroborate the phone log.
"Tylan reported that he'd been contacted by DC about the ability to administer funds to purchase the Arcade property," the minutes said.
The minutes acknowledge the money had originally been destined for the city. But then the day before -- July 21, 2005, six days before the Seward official spoke with Gilman -- "Tylan received a phone call inquiring if he would be able to help move this deal forward because the City expressed some concern with doing so. The result is that approximately $1 million will go to the ASLC. The money will be used to remove the Arcade building," it said, with leftover funds for other SeaLife Center projects.
In an interview last August, Schrock said the "DC" in the minutes was a reference to Gilman, not the aide who Gilman suggested should call Schrock.
"Essentially what happened is, that the phone call that came to me was a question as to whether or not we could administer the Park Service monies in support the Waterfront Development Plan," Schrock said. "In the board meeting, what I was reporting here was that I had received a phone call but it's about the ability to administer funds that the Park Service was supposed to have used to purchase the Arcade property."
When he presented the matter to the board, before the legislation was enacted, Schrock said, "We had no idea what we could use that (money) for."
Schrock disputed the accuracy of the minutes, saying the person who took them -- his employee -- had erred in saying the money was for the Arcade property. But Schrock wouldn't identify the scribe or allow the person to be interviewed.
"Not going down the pathway -- she's not going to be talking to you, if that's where you're going to go," Schrock said.
And he couldn't explain how no one -- board member, administrator, or other attendee -- failed to catch the alleged errors before the minutes were approved at the next board meeting, on Oct. 28, 2005.
In fact, the minutes of the Oct. 28 meeting appeared to confirm the phone log and the July 22 minutes.
By the time of that meeting, SeaLife Center officials knew they would receive $1.6 million and had decided to purchase the Arcade property, the minutes said, even as they were growing concerned about "political issues that may come as fallout."
"Bottom line is that we had to move on the Arcade Building if we wanted a deal," the Oct. 28 minutes quoted Schrock as saying.
In the 46-minute interview, Schrock cited Seward's "Waterfront Development Plan" 15 times as the rational basis for the SeaLife Center's decision to buy the Arcade property. It was the plan, not a command by a Senate aide or signal from a lobbyist, that he was following, he said.
Mayor Clark Corbridge said he knew of no document with that name and referred questions to City Clerk Jean Lewis. Lewis couldn't find anything with that name either, and suggested a call to Jeff Mow, the superintendant at Kenai Fjords National Park, who helped plan the proposed federal complex, the Mary Lowell Center.
Mow said he also knew of no such document, but said that sometimes people use that term interchangeably with the Seward Waterfront Study, a 2003 report commissioned by the National Park Service and U.S. Forest Service for locating the visitor center and administrative complex.
The study, which has no force of law, was conducted by the Portico Group of Seattle, which suggested the center be built downtown. In its recommended scenario, the Arcade Building would be razed and turned into "a plaza or public square." Today, the property remains a roped-off gravel patch.
Since the August interview, Schrock has refused requests to clarify what he meant by the "plan" or to answer additional questions.
Tim Nicoulin, chief financial officer of the Portico Group, said agents from the Interior Department's inspector general showed up at his firm Aug. 28. He provided all the information they sought about how recommendations were made. The investigator from the inspector general's office told him that the FBI was also investigating, he said.
"It was a very transparent process," Nicoulin said of the study, with public hearings and a large public document.
SeaLife Center board member and Seward Councilman Willard Dunham said he thought the site would be good for expansion of the SeaLife Center, not a plaza.
"That is absolutely not true that anybody was ordered to buy the goddamned Arcade," Dunham said. "The SeaLife center was looking for places to buy or look at or lease because we needed expansion."
TESTIMONY LOST
Lindsey, the longtime Seward businessman and a partner in Arcade building, was terminally ill with cancer when he agreed to be interviewed at home in August. He said he was cooperating with the federal investigation. It is unknown what effect, if any, the loss of his potential testimony would have to any litigation arising from the probe.
Lindsey said it was McCabe's idea to create the partnership, the Centennial Group, and to buy the Arcade Building and Old Solly's next door in 2003. Each of the partners -- McCabe, a Seward native, along with Lindsey and Zelener -- owned a third of the business and contributed according to their specialities. Lindsey dealt with financing, Zelener with commercial property and McCabe with politics.
"(McCabe) was yo-yoing back and forth between Washington, D.C., more times than I knew," Lindsey said. "I think it's fair to assume he had some influence back there," Lindsey said, though McCabe never provided him with details of what he did.
Their first plan was a bust. They hired an architect to design a new building with first-class office space and underground parking for the Park Service, Forest Service and the National Marine Fisheries Service. But the Interior Department wanted to build its own building sprawling across two lots, one of which included Old Solly's, Lindsey said.
Centennial was able to come to terms with Interior for Old Solly's, but they reached an impasse with the Arcade Building next door. The first government appraisal valued the building and lot at $174,000, much less than the Centennial partners were willing to sell. Then federal inspectors found asbestos and lead paint, leading to a second government appraisal of $94,000.
Centennial withdrew its offer to sell to the Park Service in July 2005 -- around the time the earmark was being rewritten.
Lindsey said that among McCabe's influential friends on Stevens' staff was Lisa Sutherland, the senator's longtime aide when he was chairman of the Appropriations Committee and then the Commerce Committee.
In August 2003, Lindsey recalled, he offered his boat to Sutherland, McCabe, a Park Service official named Peter Armato and Mayor Shafer to sail into Resurrection Bay and get a view of Seward from the sea.
"They wanted to see what the waterfront looked like from a boat in terms of this waterfront development plan. They're primarily interested in the downtown area," Lindsey said.
McCabe seemed very close to Sutherland from having worked with her in Washington, Lindsey said.
"He was there because he and (Sutherland) work so closely together. They reminded me of brother and sister. There was a very cordial relationship that existed there," Lindsey said. "I think he's also close to Brad Gilman. They worked as lobbyists on fishery-related issues primarily and they were both from Alaska."
Armato said he couldn't talk about the boat trip because of the ongoing investigation.
Said Shafer: "All we did was, we were talking about the waterfront development and the need to improve the waterfront area."
Sutherland quit as Stevens' staff director on the Commerce Committee last March and began working as a lobbyist. She declined a request for an interview but said she would answer e-mailed questions. She never responded.
Contact Richard Mauer at rmauer@adn.com or 257-4345 and Tom Kizzia at tkizzia@adn.com or 907-235-4244.
HISTORY: Read earlier stories about the SeaLife Center and more about the political corruption investigation.
RIFT: How the tussle over $1.6 million started.
