Last week, the Legislative Council voted 13-1 to offer $32.5 million to purchase the Anchorage Legislative Information Office (LIO) from its developers. This decision has caused some amount of concern, so I think it is important to outline the facts.
As a member of the Legislative Council, I have been a critic of the Anchorage LIO lease extension and a proponent of more economical options for legislative space in Anchorage, including moving to accommodations in the nearby, state-owned Atwood building. The process leading up to the lease extension was flawed, and a recent court decision declared the lease invalid. Past decisions made in regard to the lease extension were not in the best interests of the state. Those decisions resulted in an increase of annual expense to the Legislature of nearly $3.5 million.
While I do not believe that the Legislature needs to own a building in downtown Anchorage, under the circumstances the most reasonable path forward is to offer to pay off the existing debt obligations and take the keys. Ending the Legislature’s relationship with the developers, and moving beyond the mistakes of the past is in the best interest of the state. This responsible solution will provide the state with a real property asset at a cost significantly below the asking price. As owners of the building, we will certainly have the ability to consider selling the building at any point in the future.
My support of the offer to the developers was made with three considerations in mind. First, the offer will cover the debt obligations on the work that prior Legislatures and particular legislators asked for. I do agree with many Alaskans that the cost of the building exceeds what the building is worth, and that it is more building than the Legislature needs. However, it is important to note that at the price offered, the developers will not be receiving payment for any equity that they have in the property, only the ability to pay off their debt obligations. While not a comfortable position to be in, I do feel that it is important to recognize that prior Legislatures authorized the work to be completed, and that there are outstanding debt obligations for that work.
Second, the purchase offer includes language directing the Legislative Affairs Agency to both economize on the space for legislative and support offices and to also work with other state agencies to occupy extra space in the building. This will help mitigate the cost, and create some modest savings in overall state expenses for office space in Anchorage.
Third, if we agree to move to the Atwood Building, Commissioner Sheldon Fisher, of the Department of Administration, has indicated that the space would not be available for occupancy until January 2018. That would necessitate an additional year and a half of lease payments at the current location, amounting to around $6 million in addition to the $3.5 million to complete tenant improvements to the Atwood building. The result would be nearly $10 million in additional expense before we would be able to occupy the space. Therefore, making an offer on the building was the best available option for fixing bad decisions made by the Legislature in the past.
As we work to put this situation behind us, we have a responsibility to make sure this does not happen in the future. To address some of the concerns about this happening again, I have introduced House Bill 354, which prohibits a person who is affiliated with a company that has been awarded a contract by the Legislature from making campaign contributions to a legislator or candidate for legislative office for four years, the length of a State Senate term. This will help make sure that our public officials are making decisions that are in the best interests of the state.
• Rep. Sam Kito III represents District 33.
