Legislature(2015 - 2016)

03/31/2016 05:05 PM LEC


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05:05:15 PM Start
07:38:30 PM Adjourn
* first hearing in first committee of referral
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                ALASKA STATE LEGISLATURE                                                                                      
                  LEGISLATIVE COUNCIL                                                                                         
                    MARCH 31, 2016                                                                                            
                        5:05 PM                                                                                               
                Approved August 3, 2016                                                                                       
                                                                                                                              
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Gary Stevens, Chair                                                                                                     
Representative Bob Herron, Vice Chair                                                                                           
Senator John Coghill                                                                                                            
Senator Lyman Hoffman                                                                                                           
Senator Charlie Huggins                                                                                                         
Senator Anna MacKinnon                                                                                                          
Senator Kevin Meyer                                                                                                             
Senator Peter Micciche                                                                                                          
Representative Mike Chenault                                                                                                    
Representative Craig Johnson                                                                                                    
Representative Sam Kito                                                                                                         
Representative Charisse Millett                                                                                                 
Representative Mark Neuman                                                                                                      
Representative Steve Thompson, alternate                                                                                        
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Mike Hawker                                                                                                      
                                                                                                                                
OTHER MEMBERS PRESENT                                                                                                         
                                                                                                                                
Senators Egan and Olson; Representatives Claman, Colver,                                                                        
Josephson, LeDoux, Ortiz, Spohnholz, Tarr, Tuck and Wool                                                                        
                                                                                                                                
AGENDA                                                                                                                        
                                                                                                                                
ANCHORAGE LIO - EXECUTIVE SESSION                                                                                               
                                                                                                                                
SPEAKER REGISTER                                                                                                              
                                                                                                                                
Sheldon Fisher, Commissioner, Department of Administrative                                                                      
  Services                                                                                                                      
Mark Pfeffer, Pfeffer Development and 716 West Fourth                                                                           
  Avenue, LLC                                                                                                                   
Don McClintock, Ashburn & Mason P.C.                                                                                            
     5:05:15 PM                                                                                                               
                                                                                                                                
 I. CHAIR GARY STEVENS called the Legislative Council meeting                                                                 
     to order at 5:05 p.m. in Room 532 (Senate Finance) of the                                                                  
     State  Capitol. Present at the  call were Senators Meyer,                                                                  
     Coghill,   Hoffman,  Huggins,  MacKinnon,  Micciche,  and                                                                  
     Stevens; Representatives Chenault, Johnson, Kito, Millett,                                                                 
     Neuman,  Thompson, alternate  member, Drummond, alternate                                                                  
     member, and Herron. Representative Hawker was absent.                                                                      
                                                                                                                                
II. ANCHORAGE LIO - EXECUTIVE SESSION                                                                                         
                                                                                                                                
     CHAIR STEVENS noted for  members that this meeting was to                                                                  
     address the  motion passed by  Legislative Council at the                                                                  
     December   19,   2015,   meeting;   specifically,  "…that                                                                  
     Legislative  Council  advises  the   Legislature  not  to                                                                  
     appropriate for the 716 W Fourth Avenue lease pending the                                                                  
     outcome  of  the currently  pending litigation  or unless                                                                  
     negotiations between  counsel for  the Legislature and  a                                                                  
     State  entity  within  the  next  45  days  result  in  a                                                                  
     competitive cost  on a  per  square foot of  usable space                                                                  
     basis." Based on that motion, Council is meeting today to                                                                  
     discuss a  proposal by the owner of 716  W 4th Avenue. He                                                                  
     said that before Council hears from Mr. Pfeffer, he wanted                                                                 
     to give time to the commissioner of Administrative Services                                                                
     who has  to leave shortly to catch a plane. He asked that                                                                  
     Commissioner Fisher address the basic question of whether                                                                  
     space  at the Atwood  Building is still  available to the                                                                  
     Legislature.                                                                                                               
                                                                                                                                
     COMMISSIONER SHELDON  FISHER confirmed that space  in the                                                                  
     Atwood   Building  continues  to  be   available  to  the                                                                  
     Legislature. He said  that the space  totals approximately                                                                 
     34,690 square feet, and it would consist of the area that                                                                  
     was formerly the Diane Restaurant on the first floor, the                                                                  
     public meeting room, and two floors in the building as well                                                                
     as some space on the 19th floor. In terms of availability,                                                                 
     which assumes that a final decision and an RSA is given by                                                                 
     early May, the space should be ready early in January 2018.                                                                
     He  said the space on the first floor, the public meeting                                                                  
     space, as  well as some space on  the 19th floor could be                                                                  
     made available sooner, approximately seven months after the                                                                
     RSA is granted.                                                                                                            
                                                                                                                                
     SENATE PRESIDENT MEYER  asked for an estimate of  what it                                                                  
     would cost to do the build-outs for the Legislature.                                                                       
                                                                                                                                
     COMMISSIONER FISHER said that the build-out was estimated                                                                  
     at  $3.5 million, did  not include  costs associated with                                                                  
moving the Legislature, and assumed that existing fixtures,                                                                     
furniture and equipment can be  repurposed and moved from                                                                       
the current office space to the Atwood.                                                                                         
                                                                                                                                
SENATE PRESIDENT MEYER followed up  to ask if  there were                                                                       
other state leases around the City of Anchorage that would                                                                      
be expiring soon and whether those employees could be moved                                                                     
to the Atwood.                                                                                                                  
                                                                                                                                
COMMISSIONER FISHER said that if the Legislature does not                                                                       
take the  space, it will  be filled  with other Executive                                                                       
Branch tenants.                                                                                                                 
                                                                                                                                
REPRESENTATIVE KITO asked if temporary space was available                                                                      
on the second floor of the Atwood that could be used in the                                                                     
transition.                                                                                                                     
                                                                                                                                
COMMISSIONER FISHER said that while the space on the second                                                                     
floor was vacant, their expectation was that some of that                                                                       
space would be used to effectuate the rest of the build-                                                                        
out, so would not really be available until early 2018.                                                                         
                                                                                                                                
CHAIR STEVENS said that currently during the interim there                                                                      
are approximately a dozen people that work in the Anchorage                                                                     
legislative offices - about six LIO staff, three in Ethics,                                                                     
and maybe  three to  four legislative offices  have staff                                                                       
present during the interim; about a dozen folks altogether.                                                                     
                                                                                                                                
SENATOR MICCICHE followed up  on Senator Meyer's question                                                                       
about other State offices moving into the Atwood to ask if                                                                      
such a move would facilitate a savings for the State.                                                                           
                                                                                                                                
COMMISSIONER FISHER agreed that certainly there would be a                                                                      
savings. The commercial lease rate in Anchorage tends to be                                                                     
a little over $3.00 per square foot; he said they haven't                                                                       
defined precisely who would relocate to the Atwood, so he                                                                       
couldn't  speak to  the  exact  savings. As  leases  were                                                                       
terminated and employees moved to the Atwood, there would                                                                       
be a savings as the Atwood Building tends to be closer to                                                                       
$1.80 per square foot. In response to a question by Speaker                                                                     
Chenault, Commissioner Fisher reiterated that  the entire                                                                       
renovation would be  finished early  in January 2018  and                                                                       
would expect that with the move, the Legislature would be                                                                       
occupying the space by the end of January 2018.                                                                                 
                                                                                                                                
SENATOR  MICCICHE asked  if it  was  possible to  achieve                                                                       
renovations for  a  lower cost  than  the estimated  $3.5                                                                       
million.                                                                                                                        
                                                                                                                                
     COMMISSIONER FISHER said that it was possible to do fewer                                                                  
     renovations to bring down the cost. He said the estimates                                                                  
     were pro forma; they haven't gone out to bid, haven't tried                                                                
     to   negotiate  more  favorable  rates  than   they  have                                                                  
     experienced in the past, but for  budgetary purposes, they                                                                 
     are suggesting a figure of $3.5 million.                                                                                   
                                                                                                                                
     CHAIR  STEVENS  thanked  Commissioner  Fisher  for  being                                                                  
     available to  answer questions and for being excellent to                                                                  
     work with.                                                                                                                 
                                                                                                                                
     Chair Stevens said  that members should have received the                                                                  
     report and  addendum from Navigant. He said  he had hoped                                                                  
     there would be a purchase price that would be comparable to                                                                
     moving  to  the  Atwood  Building, and  said  that  they,                                                                  
     including Legislative Council's attorneys, Doug Gardner and                                                                
     Serena Carlsen with Stoel Rives, came up with a figure of                                                                  
     $32,500,000, which he shared with the owners; and they came                                                                
     back  with a  counter figure of  $35,450,000. They  had a                                                                  
     follow-up meeting and the owners put forth a new purchase                                                                  
     price of $33,975,000. He noted Mr. Pfeffer was here today                                                                  
  to discuss the purchase price with Legislative Council.                                                                       
                                                                                                                                
     MARK  PFEFFER  introduced himself  and  his  attorney Don                                                                  
     McClintock, who he said was here primarily to speak to some                                                                
     of the ongoing litigation issues.                                                                                          
                                                                                                                                
     CHAIR STEVENS noted that Mr. Pfeffer had requested to make                                                                 
     a public presentation and then to also be allowed to stay                                                                  
     in  Executive Session to address issues that should remain                                                                 
     confidential.                                                                                                              
                                                                                                                                
     MR. PFEFFER said that, as he spoke with various Legislators                                                                
     and Legislative Council members, he wanted to address the                                                                  
     questions that seem to keep arising about what happened and                                                                
     when it happened; that there were questions about the chain                                                                
     of events. He said he wanted to walk through the steps of                                                                  
     how we got to where we are today and then would be happy to                                                                
     discuss any proposed fiscal terms in Executive Session. He                                                                 
     said  he'd like Mr.  McClintock to respond to  any recent                                                                  
     emails  members might have  received from Alaska Building                                                                  
     Inc.'s Jim Gottstein on the litigation.                                                                                    
                                                                                                                                
     Mr.  Pfeffer  said that  prior to  May  2013,  Legislative                                                                 
     Council went through just about a dozen attempts to find a                                                                 
     new   house  for  legislative  offices  in  Anchorage;  a                                                                  
     combination  of   buy/build/lease  through  Requests  For                                                                  
     Information (RFIs). By the time it got to April 2013, none                                                                 
     of  those procurement efforts had resulted in a solution.                                                                  
The Legislative Council approached him and his partner (Bob                                                                     
Acree) to provide alternatives for how to extend the lease.                                                                     
They asked specifically for three choices: (a) new carpet                                                                       
and paint, lease rate remains the same; (b) new carpet, new                                                                     
paint, repair bathrooms, fix elevators and some mechanical                                                                      
upgrades with a moderate increase in the rate; and  (c) a                                                                       
full modernization which is what they had  just done with                                                                       
the old Chevron building near the Park Strip on 9th Avenue.                                                                     
Those options were presented in  May 2013 and Legislative                                                                       
Council  indicated  a  preference for  the  modernization                                                                       
option, but said they wanted to go out for an RFI one more                                                                      
time to  see if anything else was available. The  RFI was                                                                       
published and  two responses  were received.  He said  he                                                                       
wasn't  present at  the  Executive  Session meeting,  but                                                                       
understood the proposals were deemed  unacceptable. A new                                                                       
Legislative Council meeting was called for June  7, 2013,                                                                       
and at that meeting, several motions were made. In general,                                                                     
they authorized the Chair to move  forward to negotiate a                                                                       
lease on  a full modernization basis and  how to do  that                                                                       
under the Legislature's procurement code, and hiring Alaska                                                                     
Housing Finance  Corporation (AHFC) as  the Legislature's                                                                       
third party representative to review the proposal. At that                                                                      
point, the Chair had the authority to enter into a contract                                                                     
without coming back  to Legislative Council; he indicated                                                                       
that was  not  his preference and  that he  wanted to  go                                                                       
through a process. Mr. Pfeffer said  that they then spent                                                                       
three months, June through August, with Legislative Affairs                                                                     
Agency and  legislative staff and AHFC,  who had a  third                                                                       
party  construction cost  estimator  and  a  third  party                                                                       
appraiser. As  we  developed the scope  that Council  was                                                                       
looking for and the finished project, the prices would be                                                                       
estimated and AHFC would  review it and decide if  it was                                                                       
fair and reasonable in the market place. That was a three                                                                       
month back-and-forth process, at the end of which the Chair                                                                     
chose to come back to Council. On August 23, 2013, and in                                                                       
an  Executive  Session,  we  presented  the  scope,  AHFC                                                                       
presented their findings of cost competitiveness, and there                                                                     
were no  objections; because it was in Executive Session,                                                                       
there   aren't   meeting   minutes   to   reflect   those                                                                       
presentations. The public portion of the meeting shows that                                                                     
members came out of Executive Session; the Chair indicated                                                                      
there were no objections to moving forward; Representative                                                                      
Johnson made a motion to try to negotiate a purchase price;                                                                     
and the deal  was set to go. The  only thing remaining at                                                                       
that point  was to  sign a  lease and, in  order to  move                                                                       
forward on a lease and to do the improvements, we needed to                                                                     
be able  to finance the  improvements. That meant getting                                                                       
past the scrutiny of banks; we went to several banks in an                                                                      
attempt to finance the project. The banks wanted to see the                                                                     
     T's crossed and the I's dotted before they made that loan.                                                                 
     Two key exhibits to the lease were a nine page procurement                                                                 
     officer's finding that he said he believed was drafted by                                                                  
     Legislative  Legal  and  signed  by   the  Chair  as  the                                                                  
     procurement officer, and a  finding of savings under this                                                                  
     methodology as compared to providing the  same scope in a                                                                  
     different place in downtown Anchorage. He said that's kind                                                                 
     of  a tricky  concept because at  that time there  was no                                                                  
     ability to  lease more than maybe 10,000 to 15,000 square                                                                  
     feet in  any single location in downtown Anchorage, so if                                                                  
     you wanted space with parking onsite in the quantities we                                                                  
     were  talking about,  it essentially boiled  down to  new                                                                  
     construction so the cost comparison was to try to be 10% or                                                                
     greater below new construction. The AHFC reports concluded                                                                 
     that.  There  was a  finding  by the  Legislative Affairs                                                                  
     Executive Director that that test  had been met and there                                                                  
     was a letter sent to Legislative Budget & Audit saying that                                                                
     they had met that test, which was required by statute. He                                                                  
     said  that as  part of  the procurement officer's finding                                                                  
     there was a  notice to the legislative leadership that the                                                                 
     Chair intended to enter into the lease. He said that took                                                                  
     about three weeks and the lease was  then signed September                                                                 
     19, 2013.                                                                                                                  
                                                                                                                                
     Mr. Pfeffer said that  basically we were in a position of                                                                  
     okay, perform, or you're in default under the lease. We got                                                                
     to  work, we  acquired the adjacent property, we  let the                                                                  
     construction contracts and we got the project done. We were                                                                
     obligated to  deliver a completed project by December 31,                                                                  
     2014.  As we  got close to  completion, we were  ready to                                                                  
     transition from the construction lenders to the long-term                                                                  
     lender. The  long-term lender was new to  the project and                                                                  
     wanted to see  the T's crossed and the I's dotted. He had                                                                  
     the  lease with  the exhibits,  the procurement officer's                                                                  
     finding, the  letter to LB&A; but  as with any  commercial                                                                 
     real  estate transaction, that lender  also wanted what's                                                                  
     called a Subordination of Non-Disturbance Agreement, which                                                                 
     is basically something that is signed right before you do                                                                  
     the final closing of the financing and the lender wants the                                                                
     tenant  to say  everything's in good  order, the  work is                                                                  
     complete, we're  satisfied with the  results, the scope's                                                                  
     been done, all the conditions have been met and we're ready                                                                
     to commence paying rent. He said that agreement came from                                                                  
     their lender to Legislative Council and that was signed by                                                                 
     the  Chair as  procurement officer on  December 23, 2014.                                                                  
     Based  on that certification that everything was  in good                                                                  
     order   and  good  effect,  the  lender   closed  on  the                                                                  
     transaction, paying  off the  construction loan;  and the                                                                  
     leased commenced January 1, 2015.                                                                                          
Mr. Pfeffer  said that shortly  thereafter, fiscal crisis                                                                       
issues  started  to  rise  and  everybody started  second                                                                       
guessing if this was actually the best solution. The option                                                                     
of relocating to the Atwood Building was discussed and that                                                                     
culminated in  Legislative  Council  recommending to  the                                                                       
conference committee to fund the full lease which happened                                                                      
last year, so the  2016 annual rent amount was funded. As                                                                       
part of  that recommendation from the Council,  they also                                                                       
asked the Chair again to negotiate a purchase price. During                                                                     
the  summer of last  year (2015)  and into  September and                                                                       
October, we  met with Senator Stevens and  Serena Carlsen                                                                       
(Stoel  Rives  LLC)  and  Doug  Gardner  (Legal  Services                                                                       
Director), and we basically said the purchase price should                                                                      
be $37,000,000, which was our costs  and those costs were                                                                       
validated by the  third party before we  entered into the                                                                       
contract.  If  we   didn't  have  those  validations  and                                                                       
certifications and procurement findings, we wouldn't have                                                                       
entered into  the contract, but  we  did, based on  those                                                                       
approved costs. We  believed that to  be a  fair purchase                                                                       
price. He said that in December, an analysis was presented                                                                      
to  Legislative Council  that showed  a  wide variety  of                                                                       
different ways of looking at comparison of costs. He said                                                                       
that many of the Council members questioned at a meeting on                                                                     
December 4, 2015, and again on December 19, 2015, if there                                                                      
was really a true third party analysis done of that. By the                                                                     
time we got to December 19, 2015, we were six days before                                                                       
the holiday  and, at that  point, the Council  passed the                                                                       
motion that Senator Stevens read earlier that, in essence,                                                                      
said that Council recommended to the full Legislature not                                                                       
funding the  lease  unless it  can be  shown  to be  cost                                                                       
competitive on a  usable square foot basis. We  then said                                                                       
okay, we  think we have  a lease that  says something but                                                                       
alright, here's a new target. We said  we were willing to                                                                       
try to jump in and help and see if we can find savings; we                                                                      
realized things were different than when this deal was cut.                                                                     
He said  we started to  work to see  if we could  hit the                                                                       
target set  in  that motion.  We asked  that a  financial                                                                       
consultant be retained by Legislative Council so that there                                                                     
was an independent analysis and that request was declined,                                                                      
but we submitted our proposal within the 45 days thinking                                                                       
that we believed we hit the target.                                                                                             
                                                                                                                                
Mr.  Pfeffer said  there was  somewhat of  an independent                                                                       
analysis by  the  Department of  Revenue  who prepared  a                                                                       
spreadsheet that said, yes, under these conditions, that is                                                                     
a  cost  competitive solution.  Legislative Council  then                                                                       
convened February 11, 2016, and  said that an independent                                                                       
analysis was needed because there were  so many different                                                                       
opinions. Council  retained Navigant  Consulting; over  a                                                                       
     three week  period they completed their analysis. He said                                                                  
     they met with him for an hour and a half somewhere near the                                                                
     end  of  that  three  weeks. He  provided  them with  his                                                                  
     information and then on March 14, they came out with their                                                                 
     report. He said  we didn't see that report until March 16                                                                  
     and, in essence, it says that if the State were to purchase                                                                
     the building for the $37 million, the equivalent lease rate                                                                
     for Atwood would be about 4% higher. The report said that                                                                  
     if  the  State were  to purchase  the building  for $35.6                                                                  
     million, it would  be equivalent to the lease for Atwood;                                                                  
     and,  obviously, if you purchased it for  less than $35.6                                                                  
     million, it would be less than the Atwood. He said we were                                                                 
     pleasantly surprised to have it confirmed by the consultant                                                                
     that  we were cost  competitive. We believed we  hit that                                                                  
     target from  the December 19, 2015, meeting motion. Since                                                                  
     then, as Sen. Stevens said, shortly after that report came                                                                 
     out, Sen. Stevens made a purchase offer of $32.5 million,                                                                  
     and  we agreed to lower the price to  get within a number                                                                  
     that's lower than needed to be competitive with Atwood, and                                                                
     we  proposed $35.4 million. He  said, subsequent to that,                                                                  
     just  this past Monday, there was  a conference call with                                                                  
     Sen.  Stevens, Rep. Herron, Mr.  McClintock, Mr. Pfeffer,                                                                  
     Serena Carlsen, and Doug Gardner. After a bit of "what are                                                                 
     we gonna do," Rep. Herron asked if we'd be willing to split                                                                
     the  difference between those two numbers and we verbally                                                                  
     agreed to  that. It hasn't been done in writing, with the                                                                  
     exception that he said he sent an email this afternoon to                                                                  
     confirm that  the verbal agreement was for  a number just                                                                  
     slightly less than $34 million, which puts it solidly below                                                                
     the cost of Atwood on a usable square foot basis.                                                                          
                                                                                                                                
     Mr.  Pfeffer said  the Navigant report  also, on  page 6,                                                                  
     highlighted really  three other factors  that they didn't                                                                  
     address from a financial perspective. He said he was just                                                                  
     going from memory, but that the report said it doesn't take                                                                
     into  account any of the costs or  expenses that might be                                                                  
     associated  with  breaking  the  lease  or   any  of  the                                                                  
     relationships that breaking the lease  might cause in the                                                                  
     business  community;  it   doesn't  account  solidly  for                                                                  
     potential cost increases in a move to the Atwood Building.                                                                 
     He   said   Council  just   heard  the   Commissioner  of                                                                  
     Administration say they believed that to be the cost, but                                                                  
     might be less, might be more. He said the report also laid                                                                 
     out that the office building as designed and built was per                                                                 
     Council's specifications and hits  a lot  of the criteria                                                                  
     that are  important to the legislative branch that may or                                                                  
     may not be achievable in the Atwood Building. He said those                                                                
     are intangibles. He believed they beat the cost per square                                                                 
     foot number plus we avoid those intangibles. The last thing                                                                
he said he  wanted to add before Mr. McClintock addresses                                                                       
the litigation issues was that several Council members have                                                                     
said that they heard a rumor that  the owners have made a                                                                       
lot of money on this project - maybe we made $9 million or                                                                      
maybe $5  million or  maybe $3 million.  He said that  on                                                                       
several   occasions   by   multiple  different   parties,                                                                       
Legislators and others, have asked if we would be willing                                                                       
to agree to an audit of the cost and every time we've been                                                                      
asked, we've said yes. If we go into Executive Session and                                                                      
it's important to everybody, we'd almost prefer to insist                                                                       
that there  was an audit  because we know what  our costs                                                                       
were, we know that they  were validated up front, we know                                                                       
that they are fair and  reasonable. He said we'd ask that                                                                       
Council get an independent auditor to confirm that  so it                                                                       
puts that rumor to rest.                                                                                                        
                                                                                                                                
Mr. Pfeffer said the point was  that the first request of                                                                       
them was in April of 2013 - can we solve a problem, can we                                                                      
give  Council solutions -  and  there have  been multiple                                                                       
requests since then and every time we get those requests we                                                                     
try to  solve the problem and, so  far, we think  we have                                                                       
every time. He said if we can help achieve savings, we're                                                                       
willing to do  it and we're here to talk  about that. Mr.                                                                       
Pfeffer made  himself available  to answer  any questions                                                                       
before Mr. McClintock spoke to the litigation issues.                                                                           
                                                                                                                                
REPRESENTATIVE KITO said he had a  question and perhaps a                                                                       
comment. He said thinking back to  the motion in December                                                                       
and, while Mr. Pfeffer recounted many things that happened,                                                                     
one of  the things he didn't identify was that  the other                                                                       
part of the motion indicated that there was  either a per                                                                       
square foot comparable or that the  lawsuit resulted in a                                                                       
declaration that the lease was invalid; and he said we do                                                                       
have that second component, that the lease is invalid. He                                                                       
said that, to  him, the motion says  that the Legislature                                                                       
does  not appropriate  according to  Council's motion  in                                                                       
December. He requested clarification on that part  of the                                                                       
motion. He then said that Mr. Pfeffer had identified that                                                                       
Legislative Council had  received an appropriate possible                                                                       
third party  Department of Revenue  analysis and he  just                                                                       
wanted to find  out for the  record if Mr. Pfeffer had  a                                                                       
relationship or formal role with the Department of Revenue                                                                      
where he is engaged with that Department.                                                                                       
                                                                                                                                
MR. PFEFFER said he was not engaged with the Department of                                                                      
Revenue, but he was the chair of the Alaska Municipal Bond                                                                      
Bank Authority, which is an independent authority. The DOR                                                                      
is a  resource for the AMBBA in  doing their lending work                                                                       
around the state, but it is an independent relationship. He                                                                     
     said that review happened in December when Mr. Mitchell was                                                                
     requested by a Legislator (he wasn't sure who) to show up                                                                  
     on  December 19, 2015, and have  an opinion. Mr. Mitchell                                                                  
     came to the meeting with a spreadsheet that he said made a                                                                 
     bunch of assumptions, that he didn't have accurate data and                                                                
     which was a quick exercise for him. Mr. Mitchell presented                                                                 
     that data on December 19, 2015. When we were asked to try                                                                  
     and  hit this target of  being cost competitive, we asked                                                                  
     that  an independent third party be  hired to analyze the                                                                  
     report; we asked in writing and were told no in writing. We                                                                
     said the only person left standing was the DOR spreadsheet                                                                 
     and we,  through Representative Herron's office, had asked                                                                 
     DOR to  update their spreadsheet. DOR asked us for updated                                                                 
     information and we provided it.                                                                                            
                                                                                                                                
     REPRESENTATIVE KITO asked Chair Stevens if there would be                                                                  
     an opportunity to ask questions about the Navigant report.                                                                 
     Chair  Stevens confirmed that  would happen  in Executive                                                                  
     Session and  that Navigant would be  on teleconference to                                                                  
     answer any questions Council has.                                                                                          
                                                                                                                                
     There being no additional questions for Mr. Pfeffer, Chair                                                                 
   Stevens asked Mr. McClintock to share his information.                                                                       
                                                                                                                                
     MR.  MCCLINTOCK, from the law firm  of Ashburn and Mason,                                                                  
     said he wanted to respond in part to Representative Kito's                                                                 
     last  question. He said  his firm had  filed a  Motion of                                                                  
     Reconsideration. The court had ordered additional briefing                                                                 
     with  responses to their motion  due April 11,  2016. Not                                                                  
     surprisingly, in  the  way most  litigation is,  from our                                                                  
     perspective, the lawsuit is far from over. We think there                                                                  
     were some significant errors that were made in the court's                                                                 
     order that went beyond the question that was presented to                                                                  
     them. But that's not  to be argued here, but that was the                                                                  
     procedural status.                                                                                                         
                                                                                                                                
     Mr.  McClintock said the main thing he wanted to address,                                                                  
     and  just very quickly,  was that Council  had received a                                                                  
     number  of emails from  Mr. Gottstein offering  gratuitous                                                                 
     legal advice to the Legislature on how to proceed. He said                                                                 
     it goes without saying that he thought the Legislature had                                                                 
     excellent legal counsel with Legislative Council staff and                                                                 
     they should look to them for guidance. He said that he took                                                                
     a personal affront to a few of Mr. Gottstein's accusations                                                                 
     - not just for  himself, his firm or Mr. Pfeffer, but also                                                                 
     for  the  staff  of  the  Legislature's counsel  and  the                                                                  
     participants of  the process  they went through.  He said                                                                  
     whatever happened, it was all definitely in good faith. The                                                                
     accusations that Mr. Gottstein repeats over and over about                                                                 
outrageous conduct, or brought in motions to the court when                                                                     
he asked for punitive damages and qui tam damages - those                                                                       
motions  lost.  The   issue  Mr.   Gottstein  had  raised                                                                       
continuously, efforts to get  into the personal financial                                                                       
affairs of Mr. Pfeffer, the court had basically ruled, at                                                                       
least until this order, that those  were not relevant. He                                                                       
said  they  believe Mr.  Gottstein  made fairly  reckless                                                                       
accusations of the status of where things are. He said that                                                                     
lastly, the court had never made a finding of any sort that                                                                     
there was any bad faith that has gone forth in this process                                                                     
on behalf of any of the parties, and that he would let the                                                                      
record stand for itself. He said that  he would also note                                                                       
that early  in the case,  there was no question  that Mr.                                                                       
Gottstein acknowledged that his motivation for bringing the                                                                     
case was over  money; he wanted money and he  wasn't paid                                                                       
money,  and  he  brought the  case.  He  said  there  was                                                                       
deposition testimony  to  that  effect. Mr.  Pfeffer  has                                                                       
offered that we  will protect the  rights that 716 W  4th                                                                       
Avenue LLC has under the contract and in the litigation but                                                                     
our sincere hope is actually that another path be found to                                                                      
bring everything to a resolution.                                                                                               
                                                                                                                                
There being no further testimony offered by Mr. Pfeffer and                                                                     
Mr. McClintock, and  no further  questions, Chair Stevens                                                                       
requested the motion  to move the  Council into Executive                                                                       
Session.                                                                                                                        
                                                                                                                                
5:42:40 PM                                                                                                                    
VICE CHAIR HERRON moved  that Legislative Council go into                                                                       
Executive Session under Uniform Rule 22(B)(1), discussion                                                                       
of  matters,  the  immediate  knowledge  of  which  would                                                                       
adversely affect the  finances of  a government unit  and                                                                       
22(B)(3), discussion of  a matter  that may,  by law,  be                                                                       
required to  be  confidential. I ask  that  the following                                                                       
individuals remain in the room:  Pam Varni, Doug Gardner,                                                                       
Katrina Matheny, Linda Hay, Mike Abbott, Mark Pfeffer, Don                                                                      
McClintock, Amy Slinker and any legislative staff working                                                                       
for Council members and  that Serena Carlsen, Kevin Cuddy                                                                       
and Nigel Hughes remain on the teleconference line. We also                                                                     
welcome any Legislators that are not on Legislative Council                                                                     
to remain in the room.                                                                                                          
                                                                                                                                
CHAIR STEVENS, in response to a request by Representative                                                                       
Kito, said that his plan was to first ask the Municipality                                                                      
of Anchorage  to make a  presentation; then to  allow Mr.                                                                       
Pfeffer and Mr. McClintock to offer information, then they                                                                      
will be asked to leave the room and Council will continue                                                                       
with the Executive Session.                                                                                                     
                                                                                                                                
     There  being  no  further discussion,  Council went  into                                                                  
     Executive Session.                                                                                                         
                                                                                                                                
     7:36:17 PM                                                                                                               
     Council came out of Executive Session.                                                                                     
                                                                                                                                
     CHAIR STEVENS said the discussion in Executive Session was                                                                 
     quite  extensive. Council heard from  the Municipality of                                                                  
     Anchorage  who   was  interested  in   working  with  the                                                                  
     Legislature on  the Anchorage LIO  project; Council spoke                                                                  
     with outside attorney Kevin Cuddy with Stoel Rives LLC in                                                                  
     Anchorage, about the current litigation; Council spoke with                                                                
     Nigel  Hughes from Navigant, and Serena Carlsen, attorney                                                                  
     with  Stoel  Rives in  Seattle; and  Council  had a  good                                                                  
     discussion about all the  issues they are facing. He then                                                                  
     called for a motion.                                                                                                       
                                                                                                                                
     7:36:58 PM                                                                                                               
     VICE CHAIR HERRON moved that Legislative Council recommend                                                                 
     the purchase of 716 W. 4th Avenue building and land in the                                                                 
     amount  of $32,500,000, and authorize the  Chair to enter                                                                  
     into  a purchase and  sale agreement which is  subject to                                                                  
     appropriation by the Legislature. Legislative Council will                                                                 
     maximize space in the building by consolidating legislative                                                                
     entities.                                                                                                                  
                                                                                                                                
     CHAIR  STEVENS said  discussions will  continue with  the                                                                  
     Anchorage Municipality and  will look  at other financing                                                                  
     issues as nothing in the motion precludes trying to finding                                                                
     other ways to finance this project.                                                                                        
                                                                                                                                
     A roll call vote was taken.                                                                                                
                                                                                                                                
     YEAS:   Meyer,  Coghill,   Hoffman,  Huggins,   MacKinnon,                                                                 
             Micciche,  Chenault,   Johnson,   Kito,  Millett,                                                                  
             Thompson, Herron, and Stevens                                                                                      
                                                                                                                                
     NAYS: Neuman                                                                                                               
                                                                                                                                
     The motion was approved 13-1.                                                                                              
                                                                                                                                
     There being no  further business before the committee, the                                                                 
   Legislative Council meeting was adjourned at 7:38 p.m.                                                                       
                                                                                                                                
     7:38:30 PM                                                                                                               
                                                                                                                                

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