Subport building wins committee approval

Project's proponents field tough questions from state legislators

Posted: Wednesday, March 18, 2009

A bill clearing the way for a new state office building in Juneau has passed out of the House Community and Regional Affairs Committee, despite some tough skepticism from some legislators from up north.

"I'm going to have to go home and explain to my constituents why we're building this facility in Juneau," said Rep. Charisse Millett, R-Anchorage.

The Alaska Mental Health Trust Authority is proposing to build a $50 million, four-story building on the downtown waterfront in an area known as the subport.

It will be the new home for the Department of Labor's Juneau offices, but would be far larger than the 68,000 square feet the department now uses.

Kevin Brooks, deputy commissioner of the Department of Administration, which manages office space for the state, said some offices from three other agencies - Corrections, Fish and Game and Public Safety - would move there as well.

Under sometimes tough questioning from Millett and Rep. John Harris, R-Valdez, Brooks acknowledged the cost of the building would be more than the state was currently paying. However, it would be better quality, he said.

The building in which the Department of Labor is currently located, known as the "plywood palace," is beset with leaks and mold problems. It is currently in the 27th year of a 30-year lease.

The other agencies are in dilapidated buildings owned by the state, and need replacements or major repairs, Brooks said.

"They're in a state of disrepair that's going to require a fairly significant investment," he said.

The new building proposed by the Mental Health Trust would be state-of-the-art, more conveniently located and have lower operating costs, said Jeff Jessee, the Trust's executive director.

The Trust will use the profits from lease payments to fund its mission, he said.

Even though the state will be paying rent to another public entity, which will use the proceeds for a public purpose, Brooks said the state is obligated to get the best deal possible.

Brooks said Gov. Sarah Palin would only approve the deal if it were sound for the state.

"Any project we undertake has to be fiscally sound, and it has to be a good deal," he said.

Rep. Cathy Muñoz, R-Juneau, the guiding force behind the bill, says she has Palin's endorsement of the new building.

"I met with the governor, and she liked the project," Muñoz said.

Rep. Harris questioned taking lease payments away from a tax-paying private property and shifting them to a tax-exempt property. He grilled Mayor Bruce Botelho on the economics of the plan at a recent meeting.

It would be a good thing for the city, Botelho said, though he acknowledged that the current owner of one building would lose a tenant.

"Some economic dislocation will take place in any event given the nature of the current building," he said. State officials say they intend to leave the current Labor building at the end of the lease.

Harris also questioned the need for the building, given declining numbers of state employees in Juneau.

"The state isn't adding more employees in Juneau, they're pulling people from Juneau," he said.

Brooks said a common number mentioned of 200 transfers out of Juneau doesn't take into account the net effect of 100 transfers into Juneau. In any event, the state still has 3,300 employees in the capital and needs the space, he said.

The questions delayed the bill in committee longer than expected. By Tuesday, House Bill 161 moved out of the Community and Regional Affairs Committee without opposition.

In the meantime the bill, which already had Muñoz and Rep. Beth Kerttula, D-Juneau, as sponsors, added Rep. Kyle Johansen, House Majority Leader, and Rep. Bob Lynn, R-Anchorage, as co-sponsors.

It now goes to the House Finance Committee.

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