Anchorage

With $2 million liquidation sale, an Anchorage store chases larger goals

Inside Anchorage's old downtown library there's a giant maze of boxed and stacked heavy-duty and old-school outdoor gear — Carhartt overalls, bunny boots and a few coveted American-made Xtratufs.

The hoard has accumulated for years on the second floor of 6th Avenue Outfitters, an outdoor retail store across the street from Town Square Park. And now the stuff is the seed of an improbable new business enterprise called The Outlet Upstairs, which opened in July. A giant yellow sign outside advertises what sounds like a huge, $2 million liquidation sale.

But it's not one of those going-out-of-business sales. In fact, the two people behind The Outlet Upstairs — attorney Paul Adelman and former Anchorage chief fiscal officer Kate Giard — have another plan. They want to liquidate the merchandise and renovate the second floor to make way for, maybe, a marijuana shop, in a city where the legal recreational marijuana industry is just starting to take shape.

The other twist: Adelman and Giard are interested in selling marijuana to raise money for charity. They serve on the board of a charitable foundation created by the Sixth Avenue building's longtime owner.

Crazy idea? Adelman and Giard think it might work. If not, they plan to find another way that the building can generate more money for charity, like leasing office space.

For them, the Outlet Upstairs is a labor of love and legal obligation tied to more than two decades of friendship with the longtime building owner. It's a twist for a local business that has survived against the odds for more than three decades.

It also might mark a fresh start for a prime downtown Anchorage building that was once owned by the city but is now deteriorating.

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A store survives

Sixth Avenue Outfitters opened in 1985 in the building that is now Humpy's Alehouse. The Exxon Valdez oil spill a few years later turned out to be a boon for business, with Outfitters selling a huge volume of commercial fishing clothing to workers heading to clean up the spill.

The store moved to its current location at 524 W. Sixth Ave. in 1992. For a few years in the early 1980s, the building housed the Loussac Library.

Outdoor retailers compete fiercely in Anchorage. As well as a reliable customer base locally and in rural Alaska, the store has scrapped by over the years in part because of a good deal on rent, said store manager Brian Williams, the son of the store's co-founder, Ray Williams.

Managing the store also means swapping out summer and winter gear. Williams used to offload unsold merchandise at a big sports and recreation show at the Sullivan Arena each fall. About five years ago, the show stopped, and Williams hasn't been able to find a good substitute.

"We were getting caught up, then we lost that venue," said Williams, sitting in his desk at the back of 6th Avenue Outfitters, next to a tangled pile of wires meant to power the store's first sophisticated inventory tracking system. "And I buy too much merchandise."

So employees carried boxes of unsold merchandise upstairs, where it started to accumulate.

Changing hands

The owner of the 6th Avenue Outfitters building is identified in public records as Larry A. Passerine. Public records also show Passerine co-owned the 6th Avenue Outfitters business with Williams. Passerine, who is 95, declined to be interviewed and said he didn't want to be associated publicly with his charitable works. Earlier this year, documents show, his ownership of both the building and business transferred into a trust.

Giard became the trust administrator and Adelman the trust protector. The two used be married but divorced more than 10 years ago. They remained friends and are united by the trust agreement and a long friendship with Passerine.

In April, Giard walked up the staircase at the back of 6th Avenue Outfitters for the first time. As the trust administrator, she was looking for a spot to set up an office.

But she couldn't even walk from one side of the floor to another. She was stunned by a towering mass of outdoor gear and other items, stacked beneath a dripping ceiling.

Unpleasant find

As Adelman put it, the floor above 6th Avenue Outfitters looked like an episode of the TV show "Hoarders," "except on a commercial scale." Some space had been carved out for employees to walk. But merchandise had been piling up for years, and there was no formal accounting system or method for tracking the inventory. Boxes labeled in Sharpie ink sat stacked on every square foot of space.

There were also two abandoned apartments, strewn with personal belongings.

Other discoveries included giant black-and-white historical photographs, thousands of black bunny boots, dozens of boxes of military-grade blackout curtains. Giard and Adelman also unearthed a handful of now-rare American-made Xtratufs.

The heating and air-conditioning system no longer worked. Years of water damage from rain and snowmelt had seeped through the ceiling and disfigured the building's insides.

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Then there was the woodshop. At the end of the hall, Giard and Adelman found a drill press and 3 inches of sawdust on the floor.

Someone had been operating a cabinet-making business out of the building for years, maybe decades, Adelman said.  The man wasn't paying rent and had no formal agreement with the store. Employees were accustomed to seeing him walk through the store and up the stairs.

"Just enough time goes by, and you know, you just assume it's normal," Adelman said.  

Giard and Adelman contacted their insurance company. Within days, they had paid for the man to relocate his equipment to a storage locker.  

A store in a store 

Giard and Adelman gave themselves six weeks to set up a new store and start selling off the surplus merchandise. They wanted to renovate the second floor and use it to make money for the foundations.

It turned out Giard already had a labor pool — former city interns hired last summer to work on the city's troubled SAP city software project, which Giard, as a city official, once helped manage. On that project, the interns helped document city business, like union agreements, to set up the software.

Now some of those interns are wearing green shirts and working the retail floor at "The Outlet Upstairs." Among them is Nick Adelman, Giard and Adelman's 20-year-old son.

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Up the staircase off Sixth Avenue, the new store gleams with new lighting and smells of fresh paint. There are racks of jackets, shirts and boots discounted as much as 80 percent. Outside, the signs advertising a $2 million liquidation sale represent the estimated total value of the merchandise that Giard and Adelman want to sell.

Through a door that says "Employees only," a darkened maze of rooms still holds thousands of pieces of gear. There's still plenty of random items — a washing machine, a rolled-up rug. Down a hallway past newly organized racks of shoes, Giard and Paul Adelman can be found sitting at computers in a makeshift office. Beneath their feet is a mottled orange carpet the consistency of Muppet hair.

Months ago, it wasn't even possible to walk into the room because of the amount of stuff that had piled up, Adelman said. It took two days to empty it out.

Much of the stuff has been moved into steel shipping containers in a warehouse near downtown or dropped off at Brother Francis Shelter or the Salvation Army.

Looking ahead

Giard said she and Adelman want to make as much money as possible for the foundation.

In addition to their positions in the trust, Giard and Adelman serve on the board of what's called the LAP Foundation, a private Anchorage-based charitable foundation. Public records list the three incorporators of the foundation in 2010 as Giard, Adelman and Passerine, the former building and business owner.

In 2014, tax records show, the foundation paid $114,000 to both state and national nonprofits working in animal welfare, child welfare and leprosy treatment.

The mix of donations included $2,000 to a donkey rescue mission in Miles, Texas; $2,500 to a gorilla defense fund in Atlanta; $2,500 to Special Olympics Alaska and $2,000 to the Alaska chapter of Big Brothers Big Sisters.

American Leprosy Missions, a South Carolina-based nongovernment organization that treats and cures leprosy, received $30,000, the largest donation that year.

Facing Foster Care in Alaska, a program that gives laptops to foster children, received the second-highest amount at $20,000. Giard and Adelman are friends with Les Gara, the Anchorage state House representative who started the program, and Adelman suggested the foundation assist it.

Since 2010, the foundation has given more than $420,000 in total donations, according to Giard.

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Giard said she hopes the foundation can help give all foster children in Alaska a laptop, which would cost roughly half a million dollars a year. But more money is needed, she said.

A marijuana enterprise, while perhaps not synonymous with nonprofits, could be a big money-maker, Giard believes. Giard said the idea of a marijuana operation stemmed from a coincidence of timing. The state of Alaska issued marijuana regulations earlier this year. Soon after, Giard and Adelman discovered from a land surveyor that a warehouse in Fairview also owned by the trust would qualify for a grow operation.

It also turned out the Sixth Avenue building could accommodate a retail store, Giard said.

"If LAP Foundation did the cultivation, then more money would go to the foundation," Giard said. "It would really increase the size of donations we give every year."

Pathway to something

But getting involved in the marijuana industry is costly, complicated and time-consuming. Even as they explore the opportunity, Giard and Adelman still aren't sure it's possible.

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Because marijuana is still illegal at the federal level, Giard said, the attorney for the LAP Foundation is wary about how a marijuana subsidiary could affect the tax-exempt status of the foundation. There are other risks, like a bank refusing to loan money.  

She noted, however, that nonprofits run medical marijuana dispensaries in New York.

"It feels like the right direction," Giard said. "But we want to be cautious."

If that idea doesn't pan out, she said, there are other options, like leasing office space.

Right now, though, the focus is simply on selling off the surplus merchandise and recovering those costs, Giard said. In the first two weeks of operation, the Outlet Upstairs sold $80,000 worth of goods, close to recovering the cost of what it took to get the store started. Giard, who has a background in finance, has started doing the bookkeeping and accounting for both the outlet store and 6th Avenue Outfitters.  

Giard wants to renovate the entire building and repair its broken systems at an estimated cost of $2 million.

"This building can really be something," Giard said. "And this second floor is nothing but a deteriorating warehouse."

Williams, the manager of 6th Avenue Outfitters, said he supported renovations, as well as the idea of a marijuana shop. He did voice worry that improvements could lead to higher rent and make it even more difficult for the outdoor store to survive, though Giard said the trust, as a part-owner in the business, is also interested in its survival.  

Whatever the building ultimately becomes, she said, the profits legally have to support the charitable foundation.

"This little piece of the 500 block of Sixth Avenue is charitable intent," Giard said. "Whether that's marijuana or continuation of the 6th Avenue Outfitters store or office space … it's going to ring out profit for charity." 

Devin Kelly

Devin Kelly was an ADN staff reporter.

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