Law Offices of James B. Gottstein

406 G Street, Suite 206
tn_1916.jpg (2417 bytes)
historic Alaska Building
Anchorage, Alaska 99501
Telephone (907) 274-7686
Facsimile (907) 274-9493
james.b.gottstein@gottsteinlaw.com

Alaska Building with Anchorage Legislative Information Office Elephant Behind

Alaska Building, Inc.,
v.
716 West Fourth Avenue, LLC; Koonce Pfeffer Bettis, Inc., d/b/a KPB Architects;
Pfeffer Development LLC; Legislative Affairs Agency; and Criterion General, Inc.

Court Documents Discovery Other Documents Media

On September 19, 2013, 716 West Fourth Avenue LLC entered into a sole source (no-bid) agreement with the Legislative Affairs Agency to:

(a) demolish (i) the existing Anchorage Legislative Information Office down to its steel frame and (ii) the Empress Theatre building, and

(b) lease a newly constructed office building to LAA for the Anchorage Legislative Information Office on the two lots upon which the old LIO building and the Empress Theatre had been demolished

(LIO Lease).

This was purportedly authorized under AS 36.30.083, but AS 36.30.083 only allows sole source procurement of leased space to extend a real property lease for up to 10 years if a minimum cost savings of at least 10 percent below the market rental value of the real property at the time of the extension would be achieved on the rent due under the lease. (emphasis added).Construction of New Anchorage LIO Building, April 20, 2014

The LIO Lease is not an extension because (1) the existing building was demolished down to its steel frame (2) the adjacent old Empress Theatre, most recently the Anchor Pub, was completely demolished, (3) a brand new building was constructed on the combined sites of the old Legislative Information Office Building and the Old Empress Theatre, and (4) the premises were vacated for at least 13 months during the demolition and while the new building was constructed. This was a new construction project not a lease extension.  See, picture on the right, taken on April 20, 2014.

In addition, the cost is well over the market rental value of the real property. Comparing apples to apples, the LIO Lease rate is about $7.15 per square foot per month, while the market rate is about $3.00. Ten percent below market rate is about $2.70/square foot per month, which works out to $104,310 per month instead of the rate specified in the illegal LIO Lease of $281,638. This is $177,328 per month more than allowed under AS 36.30.083. Over the life of the LIO Lease this is $21,279,360 more than allowed under AS 36.30.083.

The old Empress Theatre and the Alaska Building shared a wall (Party Wall) and the demolition of the old Empress Theatre and construction of the New Legislative Information Office Building caused substantial damage to the Alaska Building. This damage would not have occurred but for the LAA agreeing to the illegal LIO Lease.

Count One is to declare the LIO Lease null and void or reform it to at least 10 percent below the market rental value of the real property, and in either event, award ABI 10% of the savings for bringing this action in the face of such pervasive corruption that this blatantly illegal contract has been allowed to proceed.

Count Two is for damage to the Alaska Building.

Trial Court Documents

Standing Petition for Review

Discovery

Other Documents

Media Coverage

 

last modified October 1, 2015