- Associated Press - Friday, March 25, 2016

JUNEAU, Alaska (AP) - Anchorage lawmakers are considering moving to new office space after a judge ruled that the state Legislature’s lease of their current office building violated state contracting rules and should be tossed out.

Judge Patrick McKay issued his decision Thursday on the 10-year lease the Legislature signed in 2015 for $3.4 million a year. McKay found the contract not to be an extension of a lease but a new lease that should’ve been “competitively bid,” The Juneau Empire reported (https://bit.ly/1S9Z4kE).

The Legislature’s lease of the building has drawn criticism from legislators and the public as the state faces a multibillion-dollar annual deficit.

Anchorage-based legislators have been at the 60,000-square-foot building for nearly two decades, and the 2015 agreement sought an extension to an existing lease. The Legislature had also paid about $7.5 million in “tenant improvement costs,” and the new cost per year was five times the pre-renovation cost.

McKay determined that the costs of improving and upgrading the space established the need for a new lease and not just an extension. He wrote “plain common sense ? a principle which jurisprudence should not require to be checked at the courtroom door ? mandates a finding that a contract to lease over 2.5 times more newly constructed space for just under five times the current rent with an introductory payment of $7.5 million for leasehold improvements is not a simple lease extension. . A court finding that this leasing scheme could be sole-sourced would eviscerate the competitive principles of the state procurement code.”

The judge’s decision upheld allegations brought by Jim Gottstein, owner of the adjacent Alaska Building, who filed a lawsuit alleging the lease was illegal and violated state contracting rules.

Rep. Mike Hawker, R-Anchorage, had negotiated the lease with developer Mark Pfeffer, who owns the office building.

Anchorage lawmakers are now considering a switch to the state-owned Atwood Building.


Information from: Juneau (Alaska) Empire, https://www.juneauempire.com

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