Two top Republican lawmakers said Friday that they're likely to vote to break the Legislature's lease on its downtown Anchorage offices and move into a cheaper space in the state-owned Atwood Building.
"People in the state of Alaska know two acronyms. They know PFD and they know LIO, and it's pretty sad when the LIO rises above the $3.5 billion deficit," said House Majority Leader Charisse Millett, R-Anchorage, using the acronym for the legislative information office. "I think it's time to put the LIO issue to bed and to move to the Atwood Building and start restoring some confidence (to) the public."
A joint House-Senate committee, the Legislative Council, is scheduled to consider the lease at a meeting Saturday morning. Some Senate Republicans have endorsed a move but House leaders so far have been more resistant. One of their colleagues, Rep. Mike Hawker, R-Anchorage, negotiated the no-bid lease deal for the current LIO that saw costs rise to $4 million this year after extensive renovations, up from $680,000 last year, and many critics refer to the building as the "Taj MaHawker."
In a phone interview Friday, Millett, who sits on the Legislative Council, said that "the public has spoken."
"And I think that they're looking toward the Legislature to make some wise fiscal decisions," she said. "There's obviously concerns with lawsuits, lingering lawsuits, but I also have a responsibility to my constituents."
Another House leader on the Legislative Council, Rep. Mark Neuman, also said in a phone interview Friday that he's inclined to vote for the move — though he added that he first wants to see "all the information" at Saturday's meeting.
"I want to listen to what all the options are before I pull the trigger," he said. "But I suspect we'll probably have to try to take the least expensive route."
Lawmakers are looking for ways to cut their own spending as part of an effort to reduce Alaska's overall operating budget in the face of huge deficits. This year, the state expects to draw $3.5 billion from savings to cover a $5.4 billion spending plan.
In April, the Senate Finance Committee proposed stripping the funding for the Anchorage legislative offices — a move that Sen. Gary Stevens, R-Kodiak, the Legislative Council's chair, was also exploring. But the full council, which helps set the Legislature's budget, ultimately tasked Stevens with studying a purchase of the building instead.
Stevens last month released a report showing that a purchase would cost about $43 million over the next 10 years, compared to $40 million to keep the existing lease and $10 million to move to the Atwood Building.
But at a meeting Dec. 4, Stevens' colleagues on the council questioned the validity of his report, noting that it didn't account for the fact that the state would own an asset at the end of the 10-year period if lawmakers decided to make the purchase — and they postponed a decision until Saturday.
Lawmakers say they could cancel their 10-year deal for their renovated building based on a clause in the lease that makes payments subject to the Legislature setting aside money to make them.
But the building's managing developer, Mark Pfeffer, told the Alaska Journal of Commerce this week that if lawmakers back out of the deal, he would pursue "legal recourse" — though a spokeswoman, Amy Slinker, added in an email Friday that "no decision has been made."
In a separate statement issued Friday, Pfeffer's company warned that breaking the lease could threaten the state's credit rating, citing an April letter sent to lawmakers by the Alaska Banking Association.
The statement said that the company's current asking price for the building — listed in Stevens' report as $37 million, plus $950,000 for a loan prepayment penalty — is $10 million less than its $48.5 million value, based on an appraisal commissioned by the state.
And it acknowledge that the state's financial standing had worsened since the lease was originally signed.
"We're in a different fiscal environment now than we were then," the statement quoted Pfeffer as saying. "In the interests of the long-term health of the state's economy, we're willing to work with the state to find the best way forward."
Reached by phone Friday afternoon, Pfeffer declined to be interviewed.
Saturday's meeting is set for 9 a.m. at the Anchorage legislative offices. Of the Legislative Council's 14 members, several Republican senators have said they're inclined to move to the Atwood Building. But other House leaders on the committee, including House Speaker Mike Chenault, R-Nikiski, and Rep. Craig Johnson, R-Anchorage, didn't respond to requests for comment Friday.
Sen. Bill Wielechowski, an Anchorage Democrat who's pushing an alternative proposal to move lawmakers out of their downtown space and into offices in their own districts, said he wasn't sure how Saturday's meeting would play out.
"There seems to be some momentum building to get out of the deal but I don't know," he said. "It's power politics at this point."