Feds will sell abandoned Midtown Anchorage property to city

WASHINGTON -- A dozen years after the federal government paid top dollar for a piece of prime Anchorage real estate that has since sat empty, the city may get its chance to make something of the overgrown lot next to Cuddy Park.

President Barack Obama is expected to sign into law a bill passed Monday that will allow the city of Anchorage to buy the 9-acre plot of land that was once expected to house the Alaska home of the National Archives.

It's a case of an abandoned earmark: Former Alaska Sen. Ted Stevens got the federal government to buy the property from local developers (who bought it from a group of retired teachers), but the money to put a building on it never materialized. For years it sat and then, for years more, federal and local politicians fought to get it back with the long slog of making a bill become a law.

On Monday, the House passed by a voice vote a bill sponsored by Sen. Dan Sullivan that requires the federal government to sell the land to the city for "fair market value." The same bill passed the Senate April 6 by unanimous consent. Obama is expected to sign it into law.

The bill will be Sullivan's first stand-alone bill passed into law since he came to the Senate at the start of 2015.

Sullivan called it a victory.

"This legislation has a number of concrete benefits for all stakeholders: Taxpayers will see the sale of the land go toward paying down the federal debt and streamlining the long, costly administrative process; the Archives will be able to offload a property it no longer needs; and the municipality will be able to acquire a valuable plot of developable land, which is increasingly scarce in the Anchorage area," Sullivan said.

Young, noting more than three years of work on passing the bill, said in a statement that the "legislation is a prime example of how Congress should work — identify a problem or issue, build broad support, and pass common sense solutions on behalf of your constituents."

In this case, Congress was in many ways giving up on what it had started and left unfinished.

Stevens had pushed for years for a new and expanded site for Alaska's nearly overflowing archives, and secured earmarks for the National Archives and Records Administration research, to plan for and buy the property. By 2009, the federal government had already spent $9 million on the project but a building had not yet emerged.

And it never would.

The federal government bought the 9-acre parcel of land from Stevens' friends and financial colleagues, developers Jonathan Rubini and Leonard Hyde, for $3.525 million in 2004. Rubini and Hyde doubled their investment after owning the property for just a year, largely by having it rezoned as commercial rather than residential.

The plot was originally zoned for residential use and appraised for $1.9 million. But as a commercially zoned property, it was considered worth $2.9 million to $4.5 million. The federal government never needed the zoning changed to operate in the space but accepted the massive price increase nonetheless.

In the years that followed, circumstances changed. Congress banned earmarks. The market crashed and recession hit. Stevens was relieved of his Senate duties and later died. Nobody was left to push for the $30 million building and nobody appeared to be asking for it. In 2014, Alaska's archives were moved to a repository in Seattle.

And then Young, Sullivan and others spent nearly as many years trying to unload the property as Stevens did setting the administration up to acquire it.

Technically, it doesn't take an act of Congress for the General Services Administration to unload an unused property. The GSA auctions off all manner of government property, including land. For instance, in 2015 a Seattle real estate developer paid $16 million for a former Federal Reserve Bank branch building there.

But supporters of passing the property between governments through an act of Congress say that the GSA process can be cumbersome and stretch on for years without much direction. In Baltimore, Maryland, an effort to get a former Social Security Administration building up for sale more quickly than usual faltered over the last year.

When former Anchorage Mayor Dan Sullivan (a separate person from Sen. Dan Sullivan) was lobbying for the transfer, he said he was also hoping that a local government hand in the property could guide its use to best serve the city's needs.

Under new Anchorage Mayor Ethan Berkowitz, many of the same options are on the table.

"I applaud the delegation for getting the Archives bill through Congress and on to the president's desk for signature," Berkowitz said in a statement.

Berkowitz's spokesman Myer Hutchinson said the city will look for a "multi-use" option no matter what — something that combines new residential and economic development. Hutchinson said he expects the city will probably pay between $3 million and $4 million for the property.

The bill passed Monday requires the city to pay for an appraisal, and it can purchase it for "fair market value."