2008 Alaska Election Coverage

Covered in gravel and surrounded by a construction fence, the nearly nine-acre site at 40th Avenue and Denali Street has sat virtually untouched since the land was cleared back in 2005.

Here, on a parcel designated for a new National Archives and Records Administration center, the interests of U.S. Sen. Ted Stevens, Anchorage Mayor Mark Begich and Alaska's biggest commercial real estate developers intersect most directly.

The federal government now owns the 8.98 acres. It bought the parcel from developers Jonathan Rubini and Leonard Hyde back in 2004 for $3,525,000, allowing them to more than double their investment in a little more than a year.

Parking lots were paved and utilities put in. But funding to build the center itself has not come through.

Stevens, a Republican and the project's congressional champion, may not be able to deliver the money. His party no longer controls Congress. Earmarks have been under extra scrutiny ever since Alaska's so-called "bridges to nowhere" became national flashpoints. An ongoing federal investigation into the archives land purchase may also be affecting the funding.

And Stevens is awaiting a jury verdict after his trial on criminal charges that he failed to disclose gifts, including his home renovation, on Senate forms.

Stevens secured millions in federal funding for the government to buy the land. Begich advocated for a rezoning that wasn't necessary but served to double the land's value to the sellers.

During this same period, both were business partners with developers Rubini and Hyde.

Begich and Stevens have said they weren't doing the developers any special favors, and neither had a financial interest in the National Archives land.

Now Begich, a Democrat, is challenging Stevens for his U.S. Senate seat in the Nov. 4 election.

PARK VS. BIG BOX

Anchorage city leaders have talked about a new federal archives center in that area for at least a decade, going back to the Rick Mystrom administration.

The existing archives center, on Third Avenue, is "filled to the rafters," said Richard Judson, the Maryland-based project manager with the National Archives and Records Administration. Temporary records must be shipped to Seattle.

Federal dollars for the archives project started arriving in 1999 and now add up to about $12 million, for environmental studies, building design, land purchase and site work. So far, about $9 million has been spent, Judson said. Construction costs are estimated at $30 million, of which $3 million is in hand, he said.

Most if not all the funding has been through earmarks secured by Stevens, according to an analysis by the Washington, D.C., watchdog group Taxpayers for Common Sense. The bulk came through during the years Stevens was a business partner with Rubini and Hyde and the influential chairman of the Senate Appropriations Committee. But the senator never advocated for their site during the selection process, his staff has said.

A group of retired teachers owned the nine acres for years but failed in the late 1990s to get it rezoned from multi-family residential to commercial. Such a rezoning would have dramatically increased its value. But they didn't have any firm plans for the land.

A Midtown park group fiercely opposed the rezoning effort back then. City planners, the Planning and Zoning Commission, the Spenard Community Council and dozens of residents all came out against it too.

The Mid-Town Park and Trail Steering Committee activists insisted that any development there mesh with a small neighboring park that the city wanted to expand.

Ideally, they argued at the time, the land would be added to the park, now known as Cuddy Family Midtown Park. But even if that didn't happen, the park supporters didn't want another big box store and they supported keeping the land residential, said Helen Nienhueser, one of the group's leaders.

The matter came before the Anchorage Assembly six times in 1998 and 1999 before being postponed indefinitely. Begich was Assembly chairman the first time it came up, and opposed the rezoning then. But he was off the Assembly because of term limits after that.

The rezoning never came to a vote during those years.

STEVENS: HANDS OFF

In June 2002, Rubini and Hyde's JL Properties signed an agreement to buy the nine acres from the retired teachers for $1.55 million. It considered backing out because of concerns about a rezoning in what Hyde called "the current political climate." But they stuck with the project.

Stevens, meanwhile, was inserting earmarks into the federal budget to buy land for the new federal archives center in Anchorage, without specifying where. In February 2003, Congress approved $3.75 million and the next year, after National Archives staff fretted to Stevens about speculators buying up land around the city and driving up prices, another $2.25 million.

In April 2003, Begich was elected Anchorage mayor.

The next month, with the federal government actively seeking land, Rubini and Hyde offered it two parcels: the nine-acre site, now being managed by their newly formed Eagle River Center LLC, and land in Centerpoint II, in which Stevens was an investor. They closed on their deal with the teachers in June.

Both locations made the feds' short list of potential archives sites.

In all, 20 or so parcels were offered, but most were wetlands, in an earthquake zone or had other issues, said Judson, the National Archives project manager.

"It's difficult to find a large site in the downtown and Midtown area that doesn't have some kind of encumbrances that make it a problem to purchase," said Judson, who was on the site team and traveled to Alaska maybe a dozen times during the search. The U.S. General Services Administration oversaw the site selection, he said.

Stevens wanted a site on the University of Alaska Anchorage campus, his staff said in a written statement in 2007 when the Capitol Hill publication Roll Call was reporting a story. His campaign and Senate offices both declined comment for this story.

But stringent post-9/11 security requirements ruled that out, the statement said. After that, he and his staff took a hands-off approach and didn't advocate for any particular site. They never discussed the matter with Rubini or Hyde, the statement said.

In July 2003, Rubini and Hyde withdrew Centerpoint II from the deal. They had a private company interested in a large office building there, Hyde said in a letter to the GSA.

Begich, newly elected and facing an immediate budget deficit, didn't want the feds to buy land at all. In a Sept. 16, 2003, letter to Stevens, Begich said he welcomed the archives, but urged the senator to consider allowing a private firm to build it and lease it back to the government.

"A private developer's greater flexibility could produce a better finished project for the archives," Begich wrote.

His main goal, he wrote, was to keep the property on the tax rolls.

'WE'RE THE GOVERNMENT'

For months, Rubini and Hyde had been talking with the Midtown park activists to smooth the path for the long-sought rezoning from residential to commercial.

In November 2003, they figured out how: They flipped the park group to their side.

If the feds bought the land, the developers agreed to give the park group 20 percent of their net profit in exchange for their support and testimony for the rezoning. And if the deal with the feds broke down, the park group would get three acres of land in exchange for their support.

"We were much more ready to compromise than we had been six or eight years earlier," Nienhueser said. They were convinced that the land wouldn't be developed residential any time soon, she said.

The Cuddy Family Midtown Park, now much improved, was just to the west of the site. Loussac Library was to the north. The archives would be "a natural neighbor," she said.

That December, the GSA got appraisals from two Anchorage firms. One, by Accuval-Resco Appraisal Company Inc., set the market value at $2.9 million, which factored in the strong likelihood of the rezoning.

If the commercial zoning didn't go through, the land's value would be less than half that, the appraisal said.

The other, by Black-Smith and Richards Inc., put the value at $1.95 million under residential zoning and $4.5 million if the land was rezoned commercial.

"But it didn't really matter for us, for our purposes," Judson said. "We're the federal government. We don't necessarily have to comply with the local zoning."

That's true, said Tom Nelson, municipal planning director. Still, federal agencies usually try to follow the local rules, he said.

In January 2004, the federal government made its first offer, $2.9 million, for the Rubini and Hyde site, but the developers didn't accept.

On Feb. 2, 2004, Begich sent a letter to the city Planning and Zoning Commission advocating that the nine acres be rezoned commercial and noting that the park backers were now supportive. He acknowledged that might be seen as contrary to the city's comprehensive plan but noted that the property could be developed as mixed use if the feds didn't buy it.

At the time, he had been a business partner with Rubini and Hyde in the Calais office buildings in Midtown for more than a year. But he hadn't yet disclosed the relationship, which he later described as an oversight and corrected.

Begich said in a recent interview that he was never the driving force behind the rezoning. He remembers meeting once in a City Hall conference room with the park group and JL Properties.

"They asked him as a group to support it," said Julie Hasquet, Begich's campaign spokeswoman.

"I have followed where the parks users have been on this issue," Begich said. "Because my view has always been to keep focused on what's going to benefit the long term here. It was the Midtown park."

He never thought about the rezoning driving up the land's value, he said.

"Everything is out there in the open, and I don't make a vote on this. I don't make a decision. I don't direct a decision."

City planners didn't feel that Begich was pressuring them to support the rezoning, Nelson said. Begich has chimed in on other projects too, though most mayors have not been so vocal, Nelson said. Planners had been leaning the other way but they ultimately supported rezoning to general business, with special limitations.

"We lament the potential loss of residential development abutting the midtown park, but we can see the economic problems with the R-3 (residential zoning)," the acting planning director at the time, Donald Alspach, wrote to the commission on Feb. 9, 2004. The commission agreed to recommend the Assembly rezone the land.

Less than three weeks later, the federal government reached an agreement with Rubini and Hyde's group to buy the land for $3.5 million.

Stevens only supported that site after the General Services Administration team determined it was the best option, his staff said.

Hyde told the feds it was important the deal not close before June 4, 2004. The developers would have owned the property for just more than a year by that time, which likely would have meant lower taxes on the gains.

The deal closed June 7, 2004. It generated $357,650 for the Midtown park. The money went toward park improvements including trails and completion of an amphitheater, said Chris Beck, a group member and community planner.

ZONING NEVER CHANGED

Last summer, Ray Metcalfe, a commercial real estate broker and a Begich critic, began lobbing accusations that Begich had done the developers a special favor in advocating for the rezoning.

The park committee rallied to Begich's defense.

"Mayor Begich's opposition and then support for the rezoning of this parcel matched our own views. ... The mayor deserves thanks, not criticism, for these actions," Beck wrote in a September 2007 letter to the editor on behalf of the Midtown park committee.

Nienhueser also has challenged Metcalfe.

"I've heard Ray Metcalfe on this subject. I've had an argument with Ray Metcalfe on this subject," she said. "There was absolutely no pressure from Mark on us. It was not an idea that originated with him."

Metcalfe ultimately ran against Begich in this year's Democratic primary, and lost.

The archives land purchase is now under investigation by the National Archives inspector general, an agency spokeswoman said in an e-mail. But the focus of the investigation is unclear.

"They wanted to check in light of everything that had been reported by various reporters about the connection between Sen. Stevens and, I guess, Jon Rubini and Leonard Hyde and they found nothing, absolutely nothing," Judson said recently.

Last summer, days after Stevens' Girdwood home was raided by the FBI, Judson, the government's archives project manager, called Nelson, the city planning director. "As a result of the publicity he became aware of ... investigations into the rezoning and acquisition of the site off Denali Street," according to an Aug. 7, 2007, note to file by Nelson.

"He related concerns for funding of the project ... as a result of the investigations into Senator Stevens. They fear they may lose him as a benefactor to the project and are looking into other possible ways to getting the facility constructed and made operational," Nelson's note said.

U.S. Sen. Lisa Murkowski's office said that she would evaluate a National Archives funding request like any other.

"This is not a project that we've been involved in," her communications director, Michael Brumas, wrote in an recent e-mail. "We would have to evaluate it like we evaluate all other spending requests recognizing that these are tight budget times."

If he wins on Nov. 4, Begich said, he would want to see where the Anchorage center fits into the National Archives priorities but supports putting it on the land that's already been bought.

"The old archives center downtown is in deplorable condition," Begich said.

In her Oct. 10 e-mail, National Archives spokeswoman Laura Diachenko wrote that the investigation was ongoing and all requests for information needed to go through the inspector general as a result.

"I can't confirm or deny that we have any such case ongoing at this time," said the assistant inspector general, Ross Weiland.

The Anchorage Assembly approved the rezoning July 6, 2004, but it will not take effect until structure plans are approved, which hasn't happened yet. If the plans aren't approved within five years, the hard-fought-for commercial zoning expires.

So the land is still technically zoned residential.

Anyway, for the National Archives building, the proper zoning is actually "public lands and institutions," Nelson said.

If the archives building becomes a reality, he told Judson last summer, it probably should be rezoned again.

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Reporter Kyle Hopkins contributed to this story. Find Lisa Demer online at adn.com/contact/ldemer or call at 257-4390.

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