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Alaska legislators vote to buy their Anchorage building, not cancel the lease

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  • Updated: September 28, 2016
  • Published April 13, 2015

JUNEAU -- A committee of Alaska House and Senate members backed away from a proposal to cancel the lease for pricey legislative offices in Anchorage and instead voted Monday to explore buying the property outright.

The state Senate this month proposed removing funding from the $4 million annual lease for the Legislature's Fourth Avenue offices and moving to a state-owned building nearby, the Atwood Building. But after Monday's vote, Sen. Gary Stevens, R-Kodiak, said he didn't have the same level of support for that plan as he did for a purchase.

Stevens chairs the Legislative Council, which is charged with handling the Legislature's internal business and budgets.

"There were several members of the council who wanted to look at purchasing," Stevens said in an interview. "I don't know how many, but it would be unlikely that I'd get a near unanimous vote like I did tonight if I asked them to break the lease. Many of them would say the first step is to look at purchasing."

A previous proposal to buy the office building failed, Stevens said, because the $28 million deal didn't include the land underneath the building.

A lobbyist for developer Mark Pfeffer, Bob Evans, has since informed Stevens that a deal including both the land and the building is a possibility, Stevens said. Stevens added that the land underneath the building is valued at about $2 million.

The 13-1 vote in favor of exploring a purchase came as the state's annual payments for its Anchorage offices jumped in January to $4 million from $682,000 following renovations by the building's developers, Mark Pfeffer and Bob Acree.

The renovated building features glass walls, two glass elevators and bathroom trash cans with automated lids.

Stevens in his opening remarks at Monday's meeting said he's exploring cuts that the Legislature can make to its own budget because the state is facing "enormous financial problems" with lawmakers closing a $4 billion deficit this year.

If negotiations with the building owners aren't successful, the Legislature could again explore canceling the lease, Stevens added.

The Legislature's lease for the building runs for 10 years, but it includes a clause that makes the agreement subject to lawmakers setting aside money to pay for it.

The Senate earlier this month approved a budget that only funds the lease through January, with the expectation that legislators would move into the Atwood Building at Seventh Avenue and F Street after the 2016 session ends this month.

The Legislative Council's vote Monday isn't binding, but it means that lawmakers are almost certain to stick with the House version of the state budget, which includes full funding for the Fourth Avenue offices.

The no-bid lease for the renovated space, known as the Anchorage Legislative Information Office, was negotiated by Rep. Mike Hawker, R-Anchorage, after the Legislature searched for new space for more than a decade.

Critics have referred to the building as the "Taj Mahawker," citing its amenities and cost, which one commercial broker unaffiliated with the Legislature pegged at two or three times higher than for comparable space elsewhere.

Hawker missed Monday's meeting and wouldn't comment on the committee vote, but he's said there weren't any competing properties and that office space for legislators is too specialized for comparison.

The Legislative Council's vote on Monday instructs the state-chartered Alaska Housing Finance Corp. with advising lawmakers on a purchase of the renovated offices.

The council's vice chair, Rep. Bob Herron, D-Bethel, described the move as more cautious than an outright cancellation of the lease.

"We're not going to jump off the building," Herron said at the meeting. "We're going to take the stairs down and do our due diligence."

If a purchase doesn't work out, "we go on to the next step," Stevens said. He added that the Legislature could also look at other buildings.

He said the Legislature has received a letter of interest regarding another downtown Anchorage space, the bright-yellow Sunshine Plaza, and also has looked at a Native-owned building in Midtown with offices available at $2.50 per square foot, less than half of what the state is paying for its Fourth Avenue offices.

"There are other options out there," Stevens said.

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