Legislature(2015 - 2016)HOUSE FINANCE 519
04/13/2015 05:00 PM House LEGISLATIVE COUNCIL
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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:
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1. Purchasing 716 W 4 Avenue building and land;
2. Requesting advice from the Alaska Housing Finance
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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
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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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