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Lawmakers question legislative leaders' decision to buy Anchorage offices

  • Author: Nathaniel Herz
  • Updated: September 28, 2016
  • Published April 6, 2016

JUNEAU — Several rank-and-file lawmakers said this week that they oppose the $32.5 million purchase offer made by legislative leaders to the landlords of the Legislature's Anchorage office building, calling into question whether the deal can be closed.

The joint House-Senate Legislative Council voted 13 to 1 last week to buy the Fourth Avenue building from landlords Mark Pfeffer and Bob Acree. But that overwhelming vote is solely a recommendation, with support for the offer among the full House and Senate appearing less widespread.

"I don't like it — I don't think it was a good decision," Rep. Gabrielle LeDoux, R-Anchorage, said in an interview Tuesday. "If I had had the opportunity to vote, I certainly would not have voted for it."

LeDoux was one of several Republican and Democratic lawmakers who criticized the Legislative Council vote in interviews this week. The committee, packed with House and Senate Republican leaders, voted to offer landlords Mark Pfeffer and Bob Acree $32.5 million for their Fourth Avenue building, which was $1.5 million less than the landlords' final offer to sell.

At that price, the Legislature's cost-per-square-foot will be lower than the most likely alternative, the state-owned Atwood Building on West Seventh Avenue. But because lawmakers would need less space at the Atwood Building, the total cost would still be higher if they stay put.

The purchase would also remove the building from the city's tax rolls because the private landlords pay local property taxes, while the state would not. The annual loss to the city would be about $260,000, which would be divided among other taxpayers.

A spokeswoman for the landlords, Amy Slinker, said in a prepared statement that they're "still analyzing the offer to make sure we understand all the details."

Sen. Gary Stevens, R-Kodiak, the Legislative Council chairman, said in an interview Wednesday that the landlords have agreed to the purchase price, pending the resolution of a question about taxes.

But the House and Senate still have to decide how to pay for the building, he added, as they face a $4 billion budget deficit.

The money, Stevens said, could come through the state's capital budget, or it could be borrowed, or the transaction could be financed by the city, which has offered its help.

Regardless, Stevens added, "it's not a done deal."

The Legislative Council's $32.5 million offer came one week after Anchorage Superior Court Judge Patrick McKay ruled that the Legislature's no-bid, 10-year lease extension for the building was illegal and invalid — a victory for attorney Jim Gottstein in his public interest lawsuit.

The suit revealed documents showing that the landlords collaborated closely with Rep. Mike Hawker, R-Anchorage and the Legislative Council's former chairman, to try to put together a deal that conformed to state procurement law.

Ultimately, the Fourth Avenue building underwent extensive renovations that absorbed a building next door, with the installation of glass walls, glass-walled elevators and motion-sensing trash cans that open with the wave of a hand. Annual payments for the space jumped last year to $4 million from $682,000.

Of 10 rank-and-file lawmakers interviewed this week, just one, Rep. Liz Vazquez, R-Anchorage, offered support for the Legislature's purchase offer. And even that support was qualified, with Vazquez saying she still needs to examine "the numbers."

"In the long term, it may be a really good deal because we'd own the assets," she said. "It's not that luxurious. I mean, a lot of people have automatic trash cans in their homes, you know? Just put batteries in it."

Others said they needed more information before making a decision, or expressed outright opposition when asked about the purchase price offered by the Legislative Council.

"We have a $4 billion deficit and we're making some serious cuts to some significant programs. And to come up with $32 million for that? No, no. It just doesn't make sense," said Ketchikan Rep. Dan Ortiz, an independent who caucuses with the House Democratic minority. "I don't support it."

Another minority caucus member, Rep. David Guttenberg, D-Fairbanks, called the Legislative Council's vote a "bad decision."

"I think to have public trust and confidence, we should have just walked away from it," he said.

Guttenberg said he wasn't sure where the money for the purchase would come from, or who would decide that. But, he added: "I think anywhere it goes, it'd be a close vote."

Rep. Tammie Wilson, R-North Pole, said she would have voted against the purchase offer last week had she been on the Legislative Council.

"Because I think that the way that we did things was wrong, and that's what should have been dealt with first," she said, referring to the original no-bid lease extension signed by Hawker when he was the previous committee chairman.

The outcome of a full House or Senate vote on the purchase will likely depend on the payment plan that comes together through the respective chambers' finance committees, said Senate Majority Leader John Coghill, R-North Pole.

"Do you pay cash? Do you finance? What do you do? There's a lot of open questions yet," he said. "But the first question was to buy or not to buy, and was it a credible transaction. And we squeezed the owners pretty significantly."

Stevens, the Legislative Council chair, maintained that following through with the purchase and staying in the current office space "is probably the best alternative."

"I know it's going to piss everyone off," he said. "But what have we done this year that hasn't pissed everyone off?"