Price tag on LIO sale: $37M

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Owners of the contentious Legislative Information Office in downtown Anchorage have offered to sell the building for 37 million dollars, plus additional closing costs. The developer says the sale would save the state $2,052,000 over the next nine years of the existing lease, and eliminates the potential for lawsuits if legislators walk away from the agreement.

The bid is the latest salvo in a battle between law-makers, developers, and lawyers over the price legislators agreed to for the building back in 2013 during a very different fiscal climate. The proposal, dated January 29th, outlines savings to the state if it buys the building outright rather than piece-by-piece under the 10 year lease that law-makers have debated abandoning.

The terms of the deal are laid out in a letter from October 9th, 2015 included in the materials made public Friday by the Legislative Council.

The developer claims that the sale would be cost-competitive measured against alternative options is based on figures from the Department of Revenue.

“The DOR analysis clearly confirms that the Option to Purchase will provide the Legislature with more significant savings than any other scenario, including a move to the Atwood Building,” wrote developer Mark Pfeffer, one of the managing members of the group that owns the LIO building, 716 West Fourth Avenue, LLC.

But in an accompanying memo, Legislative Affairs Agency director Pam Varni refuted the basis of that claim.

“The data provided by 716 West Fourth Avenue, LLC to the Department of Revenue for their Proposal are misleading,” Varni wrote in a memo dated Friday, February 5th.  According to Varni, by factoring in a continued debt load for leasing the Atwood space, the price is inflated. The numbers submitted to DOR are “unrealistic and erroneous,” she wrote, as the state will have paid off the Atwood building by March of 2017 (although that is not the case for the parking garage that would be part of the potential Atwood lease).

In an emailed statement, Amy Slinker, a representative for 716, wrote that Varni’s memo “lacks third party analysis.”

The disagreement over exact numbers is hardly the final say over the future of the LIO building. The Legislative Council is meeting on February 11th in Senate Finance chambers to discuss the proposal. Their recommendation will go before the full Legislature ahead of its decision on whether or not to appropriate money for the lease in the upcoming fiscal year.

The proposal also notes that the purchase option involves the dismissal of a lawsuit brought against 716 and the Legislative Affairs Agency by Alaska Building, Inc., the company run by Anchorage attorney Jim Gottstein. Reached for comment earlier in the week about what the terms of the dismissal are, Gottstein said only, “We’ll see,” and declined to elaborate.