The Municipality of Anchorage is set to own its City Hall, rather than rent it, after the Assembly approved a purchase agreement Tuesday night. In total, the city is authorized to spend about $35 million on both the building and renovations to the roof and fire systems.
The municipality has rented the downtown building as City Hall since 1979, paying rent to the current owner since 2001. Anchorage Chief Administrative Officer Bill Falsey says the city has already paid far more than the building's value in rent, and the current lease expires at the end of the year.
“Since 1979 and without adjusting for inflation, we've already paid more than $60 million in rent,” Falsey said to Assembly members Tuesday night. “It looked to us, as we were analyzing the possibilities, that there's just no reason to keep doing that in perpetuity, and it'll be in the municipality and the public's long-term best interest to just buy the building.”
To buy the building, Falsey said the city is borrowing roughly $35 million from JP Morgan Securities. The city will then lease the building from the lender for the next 30 years. And then, the city will fully own it.
Eagle River Assembly member Jared Goecker said Tuesday that he’s concerned about the timing of the purchase, which comes as the city weighs multiple tax proposals to address what officials have described as a fiscal cliff.
“It's a hard thing for people to wrap their heads around that, ‘Oh, by the way, we're going to, you know, we're going to commit $35 million, we're going to buy a building,” Goecker said. “So the timing, obviously, is not ideal, though I do understand, of course, you know, we've been renting this son of a gun for quite a while.”
But Falsey said the city will actually save money if the city buys the building.
Currently, the municipality pays about $4 million annually on rent and maintenance for City Hall. The new agreement would see an increase in the lease payment -- from about $1.8 million to $2.3 million, but a decrease in maintenance costs, down from $2.1 million to $1.3 million. Falsey said the city should see a net savings of $300,000 annually.
The Assembly approved the purchase on an 11-to-1 vote, with Goecker opposed.
