Anchorage Assembly agrees to $2.5M settlement over unapproved construction work

The Anchorage Assembly on Friday approved a settlement payout of nearly $2.5 million to a contractor over construction work completed last year without required approval.

The settlement, requested by Mayor Dave Bronson, addresses millions of dollars in work completed by Roger Hickel Contracting on the site of a proposed homeless shelter and navigation center near the intersection of Tudor and Elmore roads in East Anchorage.

Bronson’s administration has acknowledged it authorized Hickel to go ahead with extensive work on the proposed 150-bed shelter without receiving the required authorization from the Assembly, which halted the project last October after the issue came to light. In March, Hickel Contracting sued the municipality, seeking compensation for its work.

The $2,455,352 settlement was approved by the Assembly in an 8-2 vote, with members Karen Bronga and George Martinez, who both represent East Anchorage, opposed.

Several Assembly members said they believed the responsibility for the situation was in large part the mayor’s, but they supported the settlement to avoid a protracted — and more expensive — legal battle.

Supporters of the settlement agreement also said that Roger Hickel Contracting, which is often selected to complete contracts for the city, should be compensated for its work despite the lack of approval from the Assembly for that work.

“The Assembly and the executive were kind of like an arranged marriage, right? So when your spouse makes purchases that you didn’t approve … you don’t punish the individual that is providing those services,” said Assembly member Kevin Cross.

Even as they approved the settlement, some Assembly members continued to criticize the mayor’s administration for the situation.

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An amendment to the proposed settlement approved by the Assembly on Friday will make the funding come from outside Anchorage’s tax cap, meaning the payout could ultimately translate to larger tax bills for Anchorage homeowners.

“The significance is, when the taxpayers see their tax bill increase, they need to know it was because the mayor’s administration violated the law, and we were sued. It’s the closest I could get to some level of accountability,” said Constant. “That’s as close as I could get to ensuring that the voters understand, the taxpayers understand, there was a major error here.”

The current city attorney, Anne Helzer, was appointed by Bronson in February and confirmed by the Assembly in April. Constant said the Assembly’s agreement to the settlement is “evidence of an improved relationship between the attorneys and the municipal manager and the Assembly.”

“What we’re doing is we’re working together for the benefit of the city. And we won’t — at the municipal attorney’s office — allow this to happen again,” Helzer said Friday.

This is the second settlement approved by the Assembly in recent weeks stemming from actions taken by Bronson and his administration. The Assembly last month approved $277,500 to settle a lawsuit brought forth by Heather MacAlpine, the former director of the city’s Office of Equal Opportunity, who accused the Bronson administration of wrongful termination. At that same meeting, the Assembly rejected a proposal to pay $550,000 to settle legal claims against Bronson’s administration by former Municipal Manager Amy Demboski.

The Assembly’s approval of the settlement with Roger Hickel Contracting ends a monthslong saga that began with the revelation of the unapproved work last year.

But the fate of the proposed site where the work was done remains unclear.

The Assembly on Tuesday is set to consider a request from the Bronson administration for additional appropriations to complete the work on the shelter and navigation center at the Tudor and Elmore site. Some Assembly members have already signaled that they will not immediately support the request, after administration members indicated during a work session Friday that they had yet to identify funding sources that could cover the cost of construction and operations.

Assembly member Felix Rivera said Friday that he wanted to postpone a decision until August. By then, the Assembly’s Housing and Homelessness Committee, chaired by Rivera, is set to hold several meetings to consider other options for providing shelter for the city’s homeless population under what he is calling the “clean slate” approach.

“I think it does us no good to spread fantasies that the proposed Tudor and Elmore navigation center and really any new permanent year-round low-barrier shelter, for that matter, is going to solve our problems for the winter,” said Rivera. “I don’t deny that it could possibly do good in our community if it’s a well-planned facility, but it’s not going to solve our staffing needs for social workers or for treatment beds. It’s not going to solve our need for housing, which is the solution for homelessness.”

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The request from the Bronson administration was for a $7 million appropriation, which it initially said would be sufficient to complete the cost of construction. But in a presentation Friday, Community Development Director Lance Wilber said the estimated construction cost would be roughly $12.2 million. Wilber also estimated six months of work to complete the construction of the facility, meaning it would not be ready before the beginning of the coming winter season.

The administration’s housing and homelessness coordinator, Alexis Johnson, said that the cost of operating the facility would be roughly $8 million per year, far higher than previous administration estimates that ranged from $5 million to $6 million for annual operational costs.

Members of the administration said they identified nearly $7 million in federal coronavirus relief funds that could be used to begin to cover the costs for facility construction, but did not present a clear picture for how the facility construction and operations could be fully paid for.

“The biggest issue that we heard is there’s no easy funding source for this,” Assembly member Anna Brawley told reporters after the work session.

Delaying a vote on the project to a later day “is the only likely option,” said Constant, because the administration has yet to demonstrate the city has enough unspent, uncommitted funds to cover the cost of the mayor’s proposal.

“Until you have funding identified to make the proposal happen, the proposal is fake. It’s an idea,” said Constant.