Bronson administration proposes $2.5M settlement for East Anchorage shelter construction; Assembly says it’s illegal

Mayor Dave Bronson’s administration said Friday it will pay Roger Hickel Contracting nearly $2.5 million in a settlement for work done last fall on the proposed homeless navigation center before it was halted.

Anchorage Assembly leaders said such a move would be illegal.

The project was stopped when it was discovered the administration had approved $4.9 million in construction work without receiving the necessary approval from the Assembly, in violation of municipal code.

“We believe that it is in the best interest of the Municipality to settle the claim at this time and avoid the expense of litigation,” wrote Acting Municipal Manager Kent Kohlhase in a Friday letter to the Assembly. “I am writing to provide you advance notice that the Administration intends to settle that claim with finality, and that we intend to do so on March 24, 2023 by paying $2,455,351.93 to Roger Hickel Contracting, Inc.”

The Assembly said Bronson’s administration needs legislative approval to authorize that kind of a payout.

“To be clear: making the proposed payment without additional Assembly action would be illegal,” wrote Assembly leadership in a detailed, four-page response letter released Friday evening.

The Assembly did not get any advance warning prior to Kohlhase’s letter about the administration’s intentions.

“Because of this municipal law, no payment to Roger Hickel Contracting can be made to settle Navigation Center claims without additional Assembly action,” the letter said in bolded, underlined formatting.

It’s the latest development in a skirmish stretching back the length of Bronson’s tenure as mayor over homelessness, allegations of political favoritism and the separation of powers in local government. After campaigning against a proposed plan to use buildings purchased with public money for homeless shelters, supportive housing and addiction treatment, Bronson clashed with the Assembly on the issue. His administration’s proposal for a thousand-person shelter in East Anchorage was gradually whittled down to a planned 150-bed facility in a sprung-tent structure, with funding contingent on a commitment that the administration commit to a “good faith” effort to convert the Golden Lion Hotel into a treatment facility.

That tenuous deal fell apart when it emerged the administration had quietly green-lit Roger Hickel Contracting to move forward with construction work at the proposed navigation center site without going back to the Assembly to sign off on amending a $50,000 contract to expand its scope by millions of dollars.

“The Administration has acknowledged that errors were made in good faith regarding compliance with technical requirements of the procurement code,” Kohlhase said in response to questions about the Friday letter.

(That statement runs contrary to a January letter from fired Municipal Manager Amy Demboski, who alleged Mayor Dave Bronson and an adviser were aware they were violating contracting rules and the public process with the East Anchorage shelter but proceeded anyway.)

[Mayor Bronson asks for gag order against fired director as new lawsuit is filed against city in federal court]

The navigation center project was effectively killed last fall, and the site, located behind the former Anchorage Police Department headquarters by Elmore and Tudor roads, is presently buried under snow.

In his letter, Kohlhase told Assembly members that since money for the proposed shelter was technically appropriated by the Assembly under a prior resolution, albeit conditionally, it is available for the municipality to use for the settlement. Kohlhase cited a statement from Bronson in June of 2022 “promising to consider the former Golden Lion Hotel” as an option for a substance abuse treatment facility as satisfying the terms of that resolution.

“Assembly approval in this circumstance is not required; funding for the project was previously appropriated. A settlement is not a contracting action,” Kohlhase said. “The administration has authority to settle claims against the Municipality.”

That interpretation is wrong, Assembly Chair Suzanne LaFrance and Vice-Chair Christopher Constant’s said in their response letter.

The funds initially authorized for the navigation center “lapsed” after the project “was effectively ‘abandoned’” by the Assembly dropping the project in October of 2022. Members also added an amendment to the city’s operating and capital budgets specifically barring “appropriation for the payment of any settlement claims related in any amount” to the contracts associated with the navigation center.

Following Demboski’s letter, Assembly members also took the step of trying to prevent similar contracting and financial liability situations from happening again.

At the end of December, the Assembly approved an ordinance restricting the mayor’s ability to pay out settlements to contractors, with a specific eye toward what happened at the navigation center.

After it passed, Bronson vetoed the measure, but the Assembly overrode the veto in a 10-to-1 vote.

The letter from LaFrance and Constant ends with terms, specifying that if the Administration intends to pursue the settlement it needs to submit a resolution to the Assembly and participate in a work session ahead of any consideration.

“We stand ready to consider the Mayor’s proposed resolution,” the letter said.

The settlement would need to be approved by a majority vote of the body’s 12 members in order to go through, according to Assembly leadership.