Five years after the federal government paid two well-connected Anchorage developers top dollar for prime land in Midtown, the land is empty.
A much touted National Archives building destined for the nine acres at 40th Avenue and Denali Street hasn't happened. Plans and funding are in limbo.
For years, then-U.S. Sen. Ted Stevens was the project's champion in Congress. Stevens had a business relationship with the developers who sold the land to the government at a premium price.
With Stevens out, no one is pushing it in Congress anymore.
"Right now, we're sort of reassessing what to do," said Richard Judson, the National Archives manager on the project.
A newly released federal investigation concluded the National Archives and Records Administration "may have overpaid" for the land, but didn't find any wrongdoing.
At the same time they were negotiating with the feds, the developers pushed hard for a rezoning from residential to commercial that nearly doubled the price of the parcel.
The federal government didn't need the rezoning, which in the end only ensured the developers would get more money, the National Archives inspector general concluded.
The change never took effect anyway.
So far, the federal government has spent $9 million on the project, for land, site work and the design, officials said. The price tag for the proposed building is another $30 million, and of that, just $3 million is in hand.
National Archives officials defend the land purchase and say they'll figure out a way to make the project happen. They insist it's sorely needed to replace Alaska's existing archives building.
EMPTY LAND, CROWDED BUILDING
Encircled by a chain-link construction fence, the site is one of the biggest tracts of undeveloped land in Midtown. Dandelions and small trees sprout on sections cleared and covered in gravel years ago.
"It looks like a construction site waiting for something to happen," said Helen Nienhueser, a longtime local park activist. Spruce and birch trees left standing keep it from looking desolate, but the parking lot is barren, she said. She just hopes the best of the trees are left whenever the site is finally developed.
Downtown, the existing archives building on Third Avenue is about 90 to 95 percent full, said Judson, the Maryland-based National Archives director of space and security.
Its shelves are loaded with sturdy boxes full of Alaska history and personal stories. Divorces in faded ink. Village census rolls from territorial days. Records from the Exxon Valdez oil spill. Photos of seal-skinning on the Pribilofs. And more.
Federal agencies in Alaska are being told not to send their records over because the archives center is running out of space, Judson said.
The archives agency began seeking money in 2002 for a new, bigger building.
DOUBLE THE MONEY
The National Archives agency bought the Midtown land in 2004 for $3.5 million from a group headed by Alaska's most prominent developers, Jon Rubini and Leonard Hyde.
Did the agency pay too much?
The newly released investigative report says maybe.
At the point the government was reviewing bids, the land was zoned residential and appraised at $1.9 million, the report said.
Archives officials justified paying Rubini and Hyde nearly twice that amount because if zoned for business, as the developers wanted, the land was valued between $2.9 million and $4.5 million, the report said. The agency said it relied on the U.S. General Services Administration for negotiations and site selection.
The developers bought the land from a retired teachers group for $1.5 million just over a year earlier. The deal with the feds allowed them to quickly double their investment.
Stevens, once one of the poorer members of Congress, became a millionaire as a result of his investments in Rubini and Hyde real estate ventures. Stevens didn't have a financial interest in the archives land, and his aides have said he never pushed the federal government to pick that site.
Still, Stevens was famous for his ability to fund Alaska projects, and he secured earmarks for years toward the new archives building. Before Stevens lost his seat, a corruption investigation diminished his clout. He lost to then-Anchorage Mayor Mark Begich just days after being convicted of failing to disclose gifts, though the case was later thrown out at prosecutors' request.
Through a representative, Stevens declined to comment.
Rubini and Hyde also cultivated a relationship with Begich. In 2002, when Begich was working as a real estate agent and at a time he did not hold elective office, the developers gave him a small interest in their Midtown Calais properties. Begich cashed out for about $53,000 in 2006.
Both Stevens and Begich have said in the past that their financial relationships with the developers didn't lead to any political favors.
The inspector general focused on actions of National Archives employees and found no criminal wrongdoing.
A heavily blacked-out version of the three-page investigative report was released by the inspector general this month in response to a public records request first made in October.
A BENEFIT TO DEVELOPERS
The developers, Rubini and Hyde, pushed hard for the rezoning. They won over activists who for years had favored adding part of the land parcel to the adjacent Cuddy Family Midtown Park, or creating high-density residential development within walking distance to nearby businesses. Park supporters agreed not to fight the rezoning to commercial after the developers promised to contribute some of their profits to improve Cuddy park. Then-Mayor Begich supported the zoning change.
The sale to the federal government closed June 7, 2004, at the high price, although the Anchorage Assembly didn't approve the unnecessary rezoning until a month later.
"The only parties who benefited from the proposed rezoning were the real estate developers," the inspector general report concluded.
Actually, one other entity benefited: Cuddy park got more than $350,000 for improvements.
Rubini and Hyde were out of state and didn't respond to requests for comment conveyed through an assistant.
The rezoning lapsed when archives officials failed to formally accept design requirements within a 120-day deadline. The parcel remains a residential zone, but it doesn't matter. The feds don't have to comply with local planning and zoning rules, though they generally try to do so, according to Tom Nelson, city planning director.
NEW MAYOR'S VIEW
City leaders say they are surprised the project has been in limbo so long.
"I drove by there not too long ago on my way to somewhere else and of course it caught my eye," said Dan Sullivan, Anchorage's incoming mayor. "Weren't the archives going to go here? What's the status of that? Is that ever really going to happen?"
Nelson said he figured the feds would seek economic stimulus funding for the archives. The land has been cleared, parking lots were paved, a site plan created, a building design drawn.
"If there ever was a project that was, quote, shovel ready for the economic stimulus package, it seems like it would have been the national archives," Nelson said.
Actually, Anchorage's project may be redesigned to be smaller and more affordable, Judson said. So it wasn't ready to go.
Congress last approved money, $1.5 million toward construction, two years ago. But the project isn't in President Barack Obama's budget request for 2010, Judson said.
NO LONGER A PRIORITY
No one now in the Alaska congressional delegation seems eager to take on the archives project. All three said no one asked them to do so.
"We've had no contact from anybody in this community pushing that project. It's not a priority of Sen. Begich's," said Julie Hasquet, Begich's press secretary.
"Sen. Murkowski did not receive a request to fund the project nor did she include it in her annual Alaska project requests to the appropriations committee," her communications director, Michael Brumas, wrote in an e-mail.
U.S. Rep. Don Young, likewise, hasn't been asked to pursue funding, but said through his communications director that he'd try to help if asked.
The archives agency needs to do a better job making the case that the building is necessary, Judson said. It could be scaled back so it just holds permanent records, he said.
If the federal government doesn't build on the land, Mayor-elect Sullivan said he'd love to see it developed for housing, the way city planners wanted years ago.
Find Lisa Demer online at adn.com/contact/ldemer or call 257-4390.
Timeline
March 1997: U.S. Sen. Ted Stevens invests $50,000 in a real estate venture called JLS Properties led by Jonathan Rubini and Leonard Hyde.
Aug. 30, 1999: Stevens invests in a Fairbanks apartment project developed by Rubini and Hyde.
Feb. 23, 2003: Congress approves $3.75 million appropriation to buy land for a new archives center in Anchorage.
May 5, 2003: Leonard Hyde offers to sell either of two parcels to the federal government for a National Archives center. One is nine acres at 40th Avenue and Denali Street. The other, also in Midtown, is in what's called Centerpoint II, which includes Stevens as an investor.
May 30, 2003: Rubini and Hyde's group, Eagle River Center LLC, closes deal to buy the nine acres at 40th and Denali for $1.5 million from a retired teachers group.
Nov. 13, 2003: Agreement reached between Eagle River Center LLC and Midtown park committee to give it 20 percent of any net profit if the land is sold for a National Archives building, in exchange for the group's support on a rezoning from residential to commercial.
December 2003: Federal government gets two appraisals on the land at 40th and Denali. One sets the market value at $2.9 million, which factored in the strong likelihood of the rezoning. The other put the value at $1.95 million under residential zoning and $4.5 million if rezoned commercial.
Jan. 23, 2004: Congress approves another $2,250,000 for the archives land.
Feb. 2, 2004: Then-Mayor Mark Begich writes to the municipal Planning and Zoning Commission supporting the rezoning.
June 7, 2004: Rubini and Hyde's group sells the nine acres to the federal government for $3.5 million. Terms had been agreed to in March.
June 15, 2004: Stevens sells his interest in all investments with Rubini and Hyde. One investment was sold earlier in the year. He received $1,038,000 but also had to pay hefty taxes.
July 6, 2004: Property rezoning approved by Assembly. Zoning is not effective unless special conditions are agreed to in 120 days and structure plans are approved by the city within five years.
Sources: News stories, city records, land records, congressional budget documents, Taxpayers for Common Sense
By LISA DEMER
ldemer@adn.com