The state of Alaska has suspended a $37 million grant that would pay for a new indoor tennis facility in Anchorage backed by Mayor Dan Sullivan, following questions raised by one of Sullivan's political rivals.
The suspension comes in response to a concern "regarding the scope of the appropriation that authorized this grant," Scott Ruby, a senior official at the Alaska Department of Commerce, wrote in a letter sent to Mayor Sullivan on Tuesday.
That concern arose after the Department of Commerce received a copy of a letter sent Monday from Sen. Lesil McGuire, R-Anchorage, to Gov. Sean Parnell, which included an opinion from a legislative attorney raising questions about the legality of the tennis project.
The grant, which would also pay for city ice arena upgrades and other projects, is now suspended until the state Department of Law can review it, Ruby said in a phone interview.
"This was really a notice to say: 'Hey, we may have a problem here,'" Ruby said. "The Department of Law said we probably want to look at this a little bit closer."
McGuire is running for lieutenant governor against Mayor Sullivan, who has pushed for construction of the tennis facility, in the August Republican primary.
She has also proposed that the Senate Finance Committee take the tennis money and reallocate it for renovations to the city's Z.J. Loussac Library.
Since October, the tennis project funding has been the subject of contentious debate between Sullivan, state legislators, and the Anchorage Assembly.
Some legislators have complained that they were unaware when they voted on the state capital budget last year that it included funds for the tennis facility, which was under a line item for "Project 80's Deferred and Critical Maintenance."
Given the title of the line item, the state money cannot be used to build new tennis courts, the legal opinion sent by McGuire to Parnell said.
The opinion was nearly identical to another memorandum, from the same legislative attorney, released in December by state Sens. Bill Wielechowski and Berta Gardner, both Anchorage Democrats. That memorandum did not lead to a suspension of the grant.
Ruby said that his department reacted this time because McGuire's letter had come during the middle of the legislative session, which began in January, combined with a failed attempt by Wielechowski on Monday on the Senate floor to strip the funding from the tennis project.
"It had been raised to attention before, but a lot of this debate last year happened after the session ended," Ruby said. "Now that it's been raised again, and it came up as significant debate in the legislative hearing, I think is the difference."
Ruby said that the entire grant was suspended, rather than the $4.4 million earmarked for the tennis courts, because legislators gave the money to the city "in one big pot."
"So, there's no way of saying, 'We're freezing this part of it, and not freezing the other,'" he said.
Sullivan announced the grant's suspension on Tuesday evening at a meeting of the Anchorage Assembly.
In an interview, he said he was still "very confident" that all the projects would still move forward.
Sullivan cited what he said was the city's own earlier letter from the Department of Commerce, which he said explained that the detailed documents justifying the state grant were more relevant than the title.
"Yes, the title's certainly important," he said. "But what's even more important is the legislative intent language behind these appropriations. And in the legislative intent language, it was very clear which projects were to be included within the grant."
A spokeswoman for Sullivan could not immediately provide a breakdown of how much of the grant money has been used, though she said none of the $4.4 million designated for the tennis project had been spent as of Monday.
Ruby, the Department of Commerce official, said that he hoped the legal questions could be resolved within "a couple of weeks."
That timeline could be a problem for the city if the state determines that the tennis facility is ineligible for funding.
Alaska's legislative session is scheduled to end on April 20 -- meaning that state lawmakers may not end up with a chance to approve changes to the grant language if they're needed for the tennis project to go forward.
If a legal opinion comes too late, the city could potentially relinquish the money for the tennis facility, or for any other portions that could prove problematic, Ruby said.
"Obviously, it's not as clean, and it would be subject to legal review by everybody," said Ruby. "There's a lot of questions going around right now. From our standpoint, we're waiting for Department of Law to do their analysis."
Reach Nathaniel Herz at nherz@adn.com or 257-4311.
By NATHANIEL HERZ