Legislature(2015 - 2016)HOUSE FINANCE 519

04/13/2015 05:00 PM LEGISLATIVE COUNCIL

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Audio Topic
05:02:52 PM Start
05:15:29 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Teleconference <Listen Only> --
Anchorage LIO
                ALASKA STATE LEGISLATURE                                                                                      
                  LEGISLATIVE COUNCIL                                                                                         
                    APRIL 13, 2015                                                                                            
                        5:02 PM                                                                                               
                 Approved May 26, 2015                                                                                        
                                                                                                                              
                                                                                                                              
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Gary Stevens, Chair                                                                                                     
Representative Bob Herron, Vice Chair                                                                                           
Senator John Coghill                                                                                                            
Senator Lyman Hoffman                                                                                                           
Senator Charlie Huggins                                                                                                         
Senator Anna MacKinnon                                                                                                          
Senator Lesil McGuire, alternate                                                                                                
Senator Kevin Meyer                                                                                                             
Representative Mike Chenault                                                                                                    
Representative Craig Johnson                                                                                                    
Representative Sam Kito                                                                                                         
Representative Charisse Millett                                                                                                 
Representative Mark Neuman                                                                                                      
Representative Steve Thompson, alternate                                                                                        
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Senator Peter Micciche                                                                                                          
Representative Mike Hawker                                                                                                      
                                                                                                                              
AGENDA                                                                                                                        
                                                                                                                                
ANCHORAGE LIO                                                                                                                   
                                                                                                                                
SPEAKER REGISTER                                                                                                              
                                                                                                                                
     5:02:52 PM                                                                                                               
                                                                                                                                
 I. CHAIR GARY STEVENS called the Legislative Council meeting                                                                 
     to order at  5:05 p.m. in Room 519 (House Finance) of the                                                                  
     State  Capitol. Present at the  call were Senators Meyer,                                                                  
     Coghill,   Hoffman,  Huggins,  MacKinnon,   and  Stevens;                                                                  
     Representatives Chenault, Johnson, Kito, Millett, Neuman,                                                                  
     Herron, and  Thompson, alternate member. Senator McGuire,                                                                  
     alternate member, joined the meeting during the statement                                                                  
     of  the Chair. Senator Micciche and  Representative Hawker                                                                 
     were absent.                                                                                                               
                                                                                                                                
II. ANCHORAGE LIO                                                                                                             
                                                                                                                                
     CHAIR STEVENS thanked everyone for being present and said                                                                  
     this  was a  follow-up meeting after  having a  couple of                                                                  
     executive  sessions.  The  conference  committee  members                                                                  
     rightly said  they would like to  have a firm  Legislative                                                                 
     Council recommendation and  he believed it  was only fair                                                                  
     that  Legislative Council make their position as clear as                                                                  
     possible in  this matter. He  said as you  all know we're                                                                  
     facing enormous financial problems, budget reductions, this                                                                
     year and quite likely next year as well. They realize the                                                                  
     Legislature must reduce its cost of doing business as well                                                                 
     as  all the other agencies and departments that have been                                                                  
     reduced.  That's  why we  are  carefully  considering the                                                                  
     Anchorage  office building lease  just a  matter  of cost                                                                  
     reduction during a time of quite serious financial stress.                                                                 
     He  said  the motion  that will  be presented  to Council                                                                  
     recommends that  we fund  the lease for  FY 2016  for the                                                                  
     Anchorage LIO. This gives us time to negotiate a purchase                                                                  
     price with the owners of the Anchorage LIO. It gives us the                                                                
     time to get it right.                                                                                                      
                                                                                                                                
     Chair  Stevens  said   we  will  attempt  to  enter  into                                                                  
     negotiations with the owners for purchase of the building                                                                  
     and  the land. As  you know, it's very  important to many                                                                  
     members around this table that the building and the land be                                                                
     together. He said we will work with Alaska Housing Finance                                                                 
     Corporation on the purchasing of the building and we want                                                                  
     to engage professionals to negotiate this contract with us.                                                                
     He  has spoken with  the owners' representatives and they                                                                  
     indicated the owners would still be interested in selling                                                                  
     the Anchorage LIO but, of course, we have to negotiate for                                                                 
     the land as well as the building.                                                                                          
                                                                                                                                
     Chair Stevens said that, eventually, this matter will come                                                                 
     back to the  Legislative Council with a purchase price. If                                                                 
     the  Council  agrees with  the purchase  price, than  the                                                                  
Legislature will  remain  in  the  Anchorage LIO  pending                                                                       
legislative action. If the Council does not agree with the                                                                      
purchase price and if the owners have not been willing to                                                                       
negotiate than we  really must consider  use of the  non-                                                                       
appropriation clause in the  lease contract for  the 2017                                                                       
budget year, and evaluate state-owned office building space                                                                     
that might be available to  the Legislature. He said that                                                                       
the  Commissioner of  Administration has  been enormously                                                                       
helpful, forthcoming, willing to work with us, and patient                                                                      
in this entire process.                                                                                                         
                                                                                                                                
5:06:23 PM                                                                                                                    
VICE CHAIR HERRON moved and asked unanimous consent that,                                                                       
due to the state's serious and sudden revenue shortfall and                                                                     
deepening budget  concerns, Legislative Council instructs                                                                       
the operating budget conference committees to go with the                                                                       
                         th                                                                                                     
House numbers for 716 W 4   Avenue (Anchorage LIO) for FY                                                                       
2016 to  provide Legislative Council a period of  time to                                                                       
analyze its options and  directs the Chair of Legislative                                                                       
Council report back on the following:                                                                                           
                                                                                                                                
                   th                                                                                                           
1. Purchasing 716 W 4 Avenue building and land;                                                                                 
2. Requesting advice  from  the  Alaska  Housing  Finance                                                                       
                                        th                                                                                      
  Corporation (AHFC) on purchasing 716 W 4 Avenue; and                                                                          
3. Evaluating state-owned office space for the Legislature.                                                                     
                                                                                                                                
CHAIR STEVENS objected for purposes of discussion.                                                                              
                                                                                                                                
REPRESENTATIVE KITO said he  did have a  concern. He said                                                                       
that we have a unique opportunity with the availability of                                                                      
office space in the Atwood Building. We do  know that the                                                                       
cost savings will be significant even in the first year. He                                                                     
said he had a concern that when the Legislature is cutting,                                                                     
or  proposing to  cut,  the  education budget;  when  the                                                                       
Legislature is  cutting many  aspects of  early childhood                                                                       
education; proposing to  cut public radio; that  we as  a                                                                       
Legislature need to also look at our  house and find ways                                                                       
where we can be efficient. He said he recognized that while                                                                     
the building that we do have is the building that we asked                                                                      
for, that the building we do have  is very nice space for                                                                       
the  Legislature, he  does have  a  concern that  as  the                                                                       
Legislature is telling everybody else to tighten up their                                                                       
belts because we don't have a  lot of money that we as  a                                                                       
Legislature will be occupying the most expensive building                                                                       
in Anchorage. He  said he has  concerns about the process                                                                       
going forward because we do end up with a situation where                                                                       
we may, as a purchase, spend almost as much as we would on                                                                      
a 10-year lease. We do  have a unique opportunity that he                                                                       
hoped would be available in a year but there obviously is a                                                                     
     possibility it would not be  because he is sure the State                                                                  
     would like to fill the space that they have vacant at this                                                                 
     time.                                                                                                                      
                                                                                                                                
     CHAIR STEVENS said that, in  response to that, we are all                                                                  
     concerned about the legislative budget. We have made other,                                                                
     quite substantial, cuts to the legislative budget. It was                                                                  
     very difficult, in the time we had, to move forward on this                                                                
     particular issue. It is a complex issue and he hesitates to                                                                
     ask Council to make a snap decision without having all the                                                                 
     facts in front of Council.                                                                                                 
                                                                                                                                
     SPEAKER CHENAULT commended the Chair and Pam [Varni], etc.,                                                                
     for trying to look at ways to control the spending of the                                                                  
     Legislature and the money that we're in charge of. He said                                                                 
     he  thinks all of us know that if we  want to talk and to                                                                  
     discourage other areas of the state, we can all go through                                                                 
     that and we can pick out some little program that we think                                                                 
     is  near and dear to  folks in your  district. He said he                                                                  
     thought it  was commendable that Legislative Council move                                                                  
     forward with the program that the Chair discussed. He said                                                                 
     there are many concerns around this table and across this                                                                  
     state on  if the Legislature failed to approve the rental                                                                  
                                                             th                                                                 
     agreement that  we have  with the  building owners on  4                                                                   
     Avenue,  what  type  of  liability  does  that  open  the                                                                  
     Legislature up to. He said  he knew we had heard from our                                                                  
     lawyer, Doug Gardner, and his staff, who have given Council                                                                
     their best insights but we  don't know if that is exactly                                                                  
     what would happen or  not. He said he thinks that Council                                                                  
     owes  it to the Legislature to make  sure that Council is                                                                  
     doing the  right thing for Alaska and  he doesn't know if                                                                  
     buying that building is the best option that is out there;                                                                 
     it  was discussed last year and it may  have been a great                                                                  
     time to  buy it last year. He said  he thinks it's a good                                                                  
     move to put AHFC in charge of it because he thinks AHFC can                                                                
     bring us back a  valued report on whether that makes sense                                                                 
     for the State to own  a building versus leasing or renting                                                                 
     another building. He said he  thinks the Chair was on the                                                                  
     right track, he thinks Council needs to make sure that the                                                                 
     move we make is the correct move and that we are in charge                                                                 
     of the  people of Alaska's money so with that, he said he                                                                  
     appreciated all the Chair's work.                                                                                          
                                                                                                                                
     REPRESENTATIVE  MILLETT  said  she  wanted  to  echo  the                                                                  
     Speaker's  comments in  thanking Pam [Varni]  and Katrina                                                                  
     [Matheny], of  the Chair's staff,  in doing all  the hard                                                                  
     work. She said she thinks that we are doing exactly what we                                                                
     we're doing with every piece of the budget - we are looking                                                                
     at our  own house. She said we've been looking at our own                                                                  
house for a couple of months on this issue. She said that                                                                       
Council should do due diligence as the Chair has suggested                                                                      
just like we  do due diligence on every  other budget cut                                                                       
that the Legislature makes. She said she thinks further on                                                                      
this issue that the liability that we would incur if we do                                                                      
not negotiate the lease  in a different way or  break the                                                                       
binding agreement after a building that we told the builder                                                                     
exactly what we wanted, the timeframe that we wanted it in,                                                                     
so she said she thinks it will give Council a lengthy time                                                                      
to talk  amongst ourselves and with other experts in  the                                                                       
field about what it means to break that contract; if we'd                                                                       
get into a deeper fiscal problem if we got into a long-term                                                                     
lawsuit over this issue, which she said would not be good                                                                       
for the State either.                                                                                                           
                                                                                                                                
Representative Millett asked if, along with evaluating at                                                                       
the  government-to-government transition  to  the  Atwood                                                                       
Building, the Chair would also be looking at other avenues                                                                      
in Anchorage for cheaper lease space, such as the Sunshine                                                                      
Mall and a couple other buildings that were available at a                                                                      
lower lease rate than the Atwood Building.                                                                                      
                                                                                                                                
CHAIR STEVENS said that in previous discussions he had with                                                                     
Representative  Millett,  she  had  mentioned  city-owned                                                                       
Municipal properties and he felt those should certainly be                                                                      
included in the other options. He said the motion does not                                                                      
include going out  for an RFP  (Request For Proposals) in                                                                       
looking for  a  best price.  In dealing  with the  Atwood                                                                       
Building  specifically, he  didn't  think anything  could                                                                       
compare to that in the low price we would get, but he said                                                                      
he would certainly be willing to look at others along the                                                                       
way. Representative Millett said  she was  satisfied with                                                                       
that.                                                                                                                           
                                                                                                                                
REPRESENTATIVE  HERRON  said  that  he  appreciated  this                                                                       
approach. He said the analogy he would use is that Council                                                                      
is not going to jump off the building, we're going to take                                                                      
the stairs down and do due diligence.                                                                                           
                                                                                                                                
There being no  further discussion, a roll call  vote was                                                                       
taken.                                                                                                                          
                                                                                                                                
YEAS:  Meyer,   Coghill,  Hoffman,   Huggins,  MacKinnon,                                                                       
       McGuire,   Chenault,  Johnson,   Millett,  Neuman,                                                                       
       Thompson, Herron, Stevens                                                                                                
                                                                                                                                
NAYS: Kito                                                                                                                      
                                                                                                                                
The motion passed 13-1.                                                                                                         
     There being no further business before the committee, the                                                                  
   Legislative Council meeting was adjourned at 5:15 p.m.                                                                       
                                                                                                                                
                                                                                                                                
     5:15:29 PM                                                                                                               

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