An appraiser told Anchorage its lot was worth $3M. The city sold it to the former mayor for $2M.

In 2019, an Anchorage real estate firm estimated the market value of a downtown parking lot at more than $3 million.

Earlier this year, an obscure city agency voted to sell the lot for $1 million less.

The buyers were a pair of politically connected developers, who are in the process of renovating a nearby hotel: Mark Begich, a former Anchorage mayor and Democratic U.S. senator, and Sheldon Fisher, a former state revenue commissioner who once ran for U.S. House as a Republican.

The agency that sold them the lot, the Anchorage Community Development Authority, or ACDA, is focused on striking real estate deals that boost the city’s economy.

But the sale price raises questions about whose interests were served by the transaction, as does a below-market lease that the agency previously granted to the developers — especially given Begich’s close ties to two of the board’s nine voting members.

Two independent real estate appraisers who examined the deal at the request of APM Reports and Alaska Public Media say the sale price was lower than the property would likely fetch on the open market.

Public agencies often grant financial incentives to trigger new development. But construction on the hotel is already underway.

Begich, at the recent ACDA board meeting where the sale was approved, suggested that the parking lot is not an essential piece of his project. And his plan isn’t to transform the lot into a vibrant new development; it will still be used to park cars.

“It’s really just kind of a complementary component,” Begich said. “It really is just part of this bigger complex that we’re trying to develop.”

The sole board member to vote against the sale, Lance Wilber, said he did so because he felt “a little uncomfortable” selling the lot for less than its $3.2 million appraised value.

“I think Mark and Sheldon have a great, great project. I have confidence that they’ll pull it off,” said Wilber, who also leads the city’s Office of Economic and Community Development. “I just want to make sure we’re not devaluing the property for a great development opportunity.”

Among the board members voting in support of the sale was Ron Thompson, who owns a business that handled some of the permits for Begich and Fisher’s hotel renovations.

A former head of the city’s public works department, Thompson and his family own Scope Permitting & Engineering, according to its latest corporate filings dated December 2022. His business handled some of the hotel’s electrical, mechanical and plumbing permits, according to city records.

Thompson declined to comment on his vote when reached by phone afterward.

Begich said Thompson’s connection to the permitting work for the hotel business was “incidental” and downplayed the significance of their relationship.

“Even without his vote, it passed,” Begich said.

Leslie Ridle, another board member who works part time for Begich and Fisher, recused herself.

But she voted in support of the previous lease and a separate agreement for another nearby parking lot that the developers plan to rent from ACDA for the next 99 years. Ridle was not employed by Begich and Fisher at the time, but she worked for Begich for nearly a decade when he was mayor and senator.

Begich’s policymaking experience has given him firsthand knowledge of ACDA’s purpose: As mayor, he led its creation in 2005. The agency, he said, was designed to have flexibility to partner with developers on projects in ways that don’t meet what he described as the “black and white” standards of traditional procurement rules.

ACDA, which also manages a number of city-owned parking lots and garages, is not subject to standard city purchasing and competitive bidding restrictions. It can buy or sell property worth up to $6 million without approval from the Anchorage Assembly, and in the past, it has invested cash directly into projects through public-private partnerships.

“ACDA was set up for the purpose of ensuring Anchorage had an arm to spur economic development,” said Begich, who’s worked in real estate for decades. The deal, he added, is “a win-win for everyone, and that two-block area is going to be just a catalyst to change the environment of downtown and create much higher value of economic development.”

Politically influential buyers

Both Fisher and Begich have lengthy resumes in Alaska politics and business.

Fisher was an executive at telecommunications and investment firms before independent former Gov. Bill Walker appointed him commissioner of Alaska’s revenue and administration departments.

Begich lost reelection to his U.S. Senate seat in 2014 but has remained deeply involved in Anchorage and state-level politics. He hosts forums for candidates and maintains relationships not just with Democratic leaders but with Republicans including Anchorage Mayor Dave Bronson and Gov. Mike Dunleavy.

He’s also a successful businessman with a broad portfolio. Under a consulting contract with former U.S. Interior Secretary David Bernhardt, he lobbies the federal government on behalf of Dunleavy’s administration; he’s opened a grocery store in the North Slope community of Utqiagvik, and now, he and Fisher are embarking on an ambitious downtown real estate development.

The two men also have plans to renovate another building near the hotel into a marketplace with a grocery store, a distillery and residential units.

The $60 million hotel project has a number of other politically connected investors beyond Begich and Fisher, including two lobbyists and two former state legislators, according to corporate records.

The hotel, built in 1970, has 250 rooms and was once part of the Howard Johnson’s chain. It takes up a big chunk of two city blocks on the east edge of downtown, near the gritty Fairview neighborhood.

The renovated building will be an “upscale” hotel with outdoor decks, a restaurant, a microbrewery and energy-efficient heating systems, according to the developers. At ACDA’s recent meeting, Begich and Fisher said the additional property would give them more space to separate the building from the parking lot.

Now, Begich said, “you park, and you’re five feet from that back side of the building, which means that you open the window, there’s cars.”

“The idea is to push that back, create some cool landscaping,” he said. “There’ll be some outdoor decking. … It just creates a better environment.”

Begich and Fisher first approached ACDA about using a pair of city-owned parking lots for their redevelopment projects roughly two years ago, according to Executive Director Mike Robbins.

Robbins, a conservative who ran for mayor in 2021, endorsed Bronson after failing to advance to the runoff election. Bronson appointed him to run ACDA after winning that race.

Robbins has a background in business and once worked in media and marketing. He drew scrutiny during his campaign for lawsuits and federal tax liens that were filed against his companies.

In an interview, Robbins said he didn’t consider giving other businesses a chance to bid on the property.

Whose price is right?

The groundwork for the sale of the property, known as the Sockeye lot, was laid in 2022.

According to a resolution passed by the ACDA board in June of that year, the parking lot had lost nearly $68,000 in 2021 — though that was during the second half of the COVID-19 pandemic.

“All that lot was doing was costing the taxpayers money,” Robbins said, noting that his agency was under financial pressure during the pandemic.

But a review of financial records provided by ACDA shows that the lot made money before the coronavirus outbreak. The 2021 revenue loss was driven mostly by $55,000 in property tax-like payments that the agency had to start making after the lot was transferred to ACDA from another branch of city government.

In 2019, before the pandemic and before those payments were charged, the lot generated $12,500 in net revenue.

The resolution also said the lot had been “appraised” by the city at about $2.2 million, which wasn’t true. The city “assessed” it at that amount for tax purposes, which was significantly less than the $3.2 million appraisal prepared in 2019 by the real estate firm.

An appraisal is an independent real estate professional’s estimate of the price a property would command on the open market. An assessment is an often less-accurate figure assigned by the government to determine a property’s share of the tax burden, and it can frequently lag behind the actual value.

In an interview, Robbins dismissed the independent appraisal’s conclusions and said he did his own analysis after “calling around and talking to real estate agents around the city and going, ‘What’s land worth downtown?’”

“The appraisal was a little inflated,” he said.

Robbins shared a comparison he made of the Sockeye lot’s sale price with four vacant lots for sale in the area. Three of them were listed at per-square-foot prices lower than the sale price for Sockeye — though they were also farther from the heart of downtown and much smaller. The lot closest to the hotel was priced at a significantly higher per-square-foot rate.

The $2.2 million sale price of the Sockeye lot is probably less than ACDA could have gotten on the open market, said Dan Shantz, an Alaska-based real estate expert who reviewed the 2019 appraisal at the request of APM Reports and Alaska Public Media.

Shantz said the analysis shows that parking is not the most lucrative use for the property, and as a result, the authority’s losses don’t represent an appropriate measurement of its value. He said the lot’s value would be maximized by developing it into a commercial building.

“If that property was put on the market and exposed to other potential buyers, I’d be willing to bet somebody would pay more than the assessed value,” said Shantz.

A second real estate appraiser who has studied other properties in Anchorage, Chicago-based Joe Calvanico, also said the 2019 appraisal of the Sockeye lot seems consistent with the market.

“Why have an independent appraisal for $3 million and then turn around and sell it for the assessed valuation?” he wrote in an email.

Former Begich aide voted for lease

Before the developers bought the property, the authority agreed to rent it to them for a year — at a price well below what the appraisal recommended.

The 2019 appraisal, by the Anchorage firm Black-Smith, Bethard & Carlson, estimated $258,000 as a fair yearly rental price for the acre of land that the Sockeye lot sits on. But Robbins dismissed that as unrealistic.

“Why don’t you go downtown and try to rent a piece of land and see what they’ll offer it to you at? It ain’t no $258,000. I mean, come on,” Robbins said. “It’s frustrating, these appraisals.”

So, when the authority started renting the parking lot to Begich and Fisher’s business in 2022, it set the rent at a fraction of that amount.

It charged the developers just $1,000 a month to rent the lot for a year, plus property taxes, which were some $50,000 a year. The developers would have the option to buy it before the agreement expired.

The monthly rent for the lot was less than the median $1,150 rent for a one-bedroom apartment in the city, according to state data.

Also in 2022, the board approved an agreement with Begich and Fisher for another downtown lot. The property, known as the Coho lot, is 70% larger and sits next to the building that Begich and Fisher plan to renovate into a marketplace.

Under the agreement, the developers paid $12,000 a year for the right to activate a separate, 99-year lease for the Coho lot. Until they exercise that option, ACDA continues collecting parking revenue from the property, where the developers currently keep a dumpster.

The developers say they plan to initiate the long-term lease later this year. At that point, they would pay yearly rent of $42,000, which would rise to $102,000 over the course of a decade — still less than half the fair market rate estimated by the appraisal firm for the smaller Sockeye property.

Unlike the Sockeye lot, which Begich described as only complementary to the hotel, he said the Coho lot is indispensable for the redevelopment of the marketplace, currently in the demolition and design phase.

“The No. 1 question we get from potential users of that building is: How does the parking work?” Begich said. “When you don’t have control of that, you can’t really answer that question legitimately. And so it makes the project an economically viable project, in many ways.”

Among the board members voting in support of the 2022 Coho option and the Sockeye lease was Ridle, who was constituent relations director to Begich when he was mayor and then worked as his deputy chief of staff in the U.S. Senate.

While Ridle did not work for Begich at the time of her vote, she began a position a year later at a separate company owned by Begich and Fisher that manages low-income housing.

In a text message, Ridle said she had not worked for Begich for eight years at the time of the votes but still would have disclosed their friendship at the 2022 meeting.

She made no such disclosure in an audio recording of the public portion of the discussion. But Ridle said it’s possible she did so in a part of the meeting that was held in executive session, which is not open to the public.

Robbins, ACDA’s executive director, described his agency’s dealings with Begich as good for the city.

“I took a losing asset — it was costing money — and turned it into a positive,” he said. With the cash that the authority will receive in exchange, he added, “we can develop housing with it.”

“We can do untold amounts of good in leveraging that money,” he said. “That’s really what it was about.”

Robbins and Begich both touted the new revenues the renovation will generate through Anchorage’s hotel bed tax.

But the city won’t receive property taxes from the hotel for a decade. The project has qualified for an exemption for “deteriorated” areas, meaning that it will pay no city property taxes for its first 10 years.

The owners will still pay property taxes toward Anchorage’s school system and a local business advocacy organization, which is roughly half the total, Begich said.

This story was produced by Alaska Public Media and APM Reports as part of the Public Media Accountability Initiative, which supports investigative reporting at local media outlets around the country. It’s republished here with permission.

Correction: An earlier version of this story misstated David Bernhardt’s work with Mark Begich for the state of Alaska. Bernhardt consults for the state with Begich, but does not lobby with Begich.