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Suit challenging Legislature's Anchorage office lease gets first hearing Tuesday

The first court hearing on a lawsuit challenging the legality of the Alaska Legislature's pricey lease for its Anchorage offices is set for Tuesday.

The hearing comes after an attorney for the Alaska Legislature, Kevin Cuddy, offered Anchorage attorney Jim Gottstein $1 to dismiss his lawsuit, warning that Gottstein could be liable for the Legislature's legal fees if the case moved forward.

Gottstein, who estimates he's put the equivalent of $40,000 of his own time into the case, is persisting with the lawsuit that he brought because, as he put it in a phone interview Monday: "I'm pissed off."

Gottstein owns the Alaska Building, which adjoins the Anchorage Legislative Information Office, and contends a shared wall was damaged during the LIO's renovations.

He also argues that the Legislature's lease extension, signed in 2013, was invalid because it broke a state law that bars no-bid extensions unless the price is 10 percent or more below market prices.

In January, the Legislature's annual rent for the building jumped to $4 million from $680,000 after its developers, Bob Acree and Mark Pfeffer, finished renovations.

Critics have dubbed the building the "Taj Mahawker" after Rep. Mike Hawker, R-Anchorage, who negotiated the lease. They cite amenities they argue are unnecessarily luxurious, like automatically-opening trash cans in the building's bathrooms.

A state appraisal found that the new rent paid by the Legislature is below market rate, though an independent commercial broker, Larry Norene, has said the deal is "outrageous" and more expensive than rent for comparable spaces elsewhere in downtown Anchorage.

Tuesday's hearing is on a motion by the Alaska Legislature's attorney to dismiss Gottstein's case. In court filings, Cuddy argues that Gottstein lacks standing to bring the case as a citizen-taxpayer because there are other entities more affected by the Legislature's no-bid lease, like potential landlords who were deprived of a big contract.

Gottstein argues that the legal precedent cited by Cuddy only applied in a previous case because a dissatisfied bidder on a contract had already filed a lawsuit.

Reached Monday afternoon, Cuddy declined to comment on the case.

Tuesday's hearing is set for 2:30 p.m. in Superior Court before Judge Patrick McKay.