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A new plan for renovated Anchorage LIO, but will the state save?

  • Author: Pat Forgey
  • Updated: September 28, 2016
  • Published March 18, 2014

JUNEAU -- After months of getting beat up over his plan for spendy new offices for Anchorage legislators, Rep. Mike Hawker, R-Anchorage, has a new plan to buy -- instead of lease -- the renovated Anchorage Legislative Information Office.

The Legislature had previously agreed to sign a new lease for the building, currently being remodeled, at five times the cost of the current lease. At the same time, the Legislature also would be spending millions on new furnishings.

But Hawker now says that buying the building, but still leasing the ground beneath it and an adjacent parking structure, will save the state millions. He told the Legislative Council Monday evening that the building's owner has agreed to the deal.

While acknowledging what he called a "convoluted" process to get to this point, he said it wasn't his fault.

Hawker, chairman of the council, said the state got boxed into a corner by not dealing with the need for a new lease promptly enough, leaving him little flexibility when he took the lead on the council. "Extending the lease, as I painfully learned working with our counsel, was the only option we had," he said

At the same Monday meeting, he also revealed that the Capitol in Juneau needs tens of millions of dollars in repairs, something he said the Legislative Council had discussed in executive session. He provided no explanation as to why the public couldn't have been told about structural problems with its Capitol building.

House Speaker Mike Chenault, R-Nikiski, said the troubled process with the LIO lease wasn't Hawker's fault and he doesn't deserve the criticism he's been getting. "It's been unfortunate that the chairman has taken the full brunt," he said, but it was the entire council over at least eight years that failed to adequately address the looming lease expiration on the West Fourth Avenue LIO, where Anchorage-area legislators have offices and hold hearings when they're not in Juneau.

What Hawker wants to do now is buy the LIO building at a cost of $28.5 million, or the amount of the ongoing renovation. The Legislature would then rent the ground under the building and the adjacent parking structure.

By saving on financing costs and property taxes, annual lease payments will drop from the current $4 million a year to $1.6 million.

Hawker said the building's owner, politically connected developer Mark Pfeffer, will get the same amount as he would otherwise, under the proposed deal.

Annual savings to the state from the deal will amount to $2.1 million. Another $300,000 in property tax savings will come because because state ownership makes the building itself exempt from municipal taxes, but Hawker said the deal would be good for Anchorage as well.

"We're not going to give them all the taxes, but (with the renovation) we'll be giving them more than they're getting now," he said.

The tax savings could be even greater, he said, if the building's assessed value is higher than expected.

"You never know what the Municipality of Anchorage property tax assessor is going to do," he said.

Hawker said at the beginning of the council meeting that he would be asking for approval of the purchase. But Senate President Charlie Huggins, R-Wasilla, asked for a week for legislators to consider whether it was a good idea or not.

Crumbling face of the Capitol

At the same meeting, the architect overseeing the renovation of the Capitol reported on what his examination of the building had found. While the building is structurally sound and sits on a remarkably strong foundation, the building's outer shell is deteriorating badly and is at risk of collapse, especially in the event of an earthquake. Hawker and architect Wayne Jensen said costs of $33-35 million over two to three summers are likely.

"Quite frankly, its crumbling, its deteriorating," Hawker said. The entire building envelope needs to be removed and replaced with modern materials.

"This building is literally at risk in a seismic event of having the facial, the sides, literally collapse on us," Hawker said.

"Even though all you see from the outside is brick and stone, the actual structure of the building is concrete," Jensen said.

That sandstone surface is deteriorating, and in some cases falling off, and not adequately tied to the structure, he said. Jensen said that other associated work, such as replacement of the heating system, windows and installation of insulation would be part of the project, but were not the reason for it.

"The structural work is the driving force behind this project," he said.

When the building was built about 80 years ago, the threat of lateral forces in an earthquake were not well understood, he said. Last summer the most pressing work was done, including the portico. The huge marble columns out front are made up of 7-foot cylinders sitting on top of each other, Jensen said. They've now all been tied together and the foundation under them reinforced he said. That was part of a project undertaken last summer. Rep. Bill Stoltze, R-Chugiak, said he wanted assurances there would be no "bells and whistles," and the project would only include structural and life safety elements.

The work will be staged over probably three years, Hawker said, with 2014's project expected to cost $5.8 million. Legislative Council Vice-chair Peter Micciche, R-Soldotna, said the work needed to be done.

"From being in private industry, I know the real cost is in deferring maintenance," he said. Micciche manages ConocoPhillips' LNG plant in Nikiski.

But Rep. Craig Johnson, R-Anchorage, said his constituents will likely be skeptical of the project.

"Sticking new bricks on it, at the end of the day it's going to look just like it did," he said.

Hawker said the Council would meet again in a week to vote on the Anchorage and Juneau proposals.

Contact Pat Forgey at pat(at)alaskadispatch.com

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