A proposal essentially moving Juneau’s City Hall to the first two floors of the Michael J. Burns Building took another step forward Monday night when the Assembly voted 8-1 to allow staff to negotiate a purchasing agreement, but with lingering concerns including the city paying an inflated price and lack of parking.

A CBJ-requested appraisal puts the value of the first two floors at $9.3 million, but the Alaska Permanent Fund Corp. that owns the building is asking about $12 million for the space, City Manager Katie Koester told Assembly members during a Committee of the Whole meeting. She said it would cost another $5.2 million to covert the two floors to municipal offices to the extent city administrators are hoping for.

The City and Borough of Juneau has $14.5 million in funds already designated for a new or upgraded city hall.

“I would be asking you for just short of $3 million to kind of execute the plan as we envision,” Koester said. “Of course, the Assembly could always say, ‘No, we want to do a lower level of improvements to the facility.’”

In response to an Assembly member about paying the APFC’s higher asking price, Koester said “we would have to make a finding that it’s in our best interest to pay above assessed appraised value for the property” to enter such an agreement.

The dilemma, she added, is at present there don’t seem to be any other practical alternatives for CBJ, unless it continues the status quo of paying rent and occupying substandard buildings.

“I feel like it is in the best interest for two things,” Koester said. “It is in the best interest for city employees to be co-located as much as possible…I also really believe that the city is going to be in business forever and so we should own our facilities. So I do not have a lead on any other facility that’s the size that we would need to co-locate most of our downtown employees that we could own.”

The dissenting Assembly vote on entering negotiations for the Burns building space came from Ella Adkison, who has previously expressed concern about taking over state government office space since it may encourage further “capital creep.” She said Monday another concern is better options may be available in the future that wouldn’t be possible for CBJ if it purchases most of the Burns building.

“It might be your only option right now, but it is, I think, a bad one,” she said. “There’s a lot of issues that I think we’ve outlined here today. In addition to my concerns with the state space I have a lot of concerns about being a condo association with the Permanent Fund. I don’t like that they’re probably going to insist on $3 million more than the appraised value. I don’t like that. There’s not enough parking.”

At the same time, Adkison acknowledged, “I just don’t have a better option.”

The city is looking to relocate about 160 employees who work at City Hall and leased space in other buildings downtown, due to the deteriorating condition of those buildings and the hope of improving efficiency by consolidating municipal operations into a single location. Voters rejected bond measures in the fall of 2022 and 2023 to help fund a new City Hall building projected to cost upward of $40 million.

CBJ has since shifted some city operations to new buildings, such as moving the Parks and Recreation Department to the former Juneau School District administrative building that was vacated by the district as part of a cost-cutting consolidation plan.

City leaders have also considered relocating some municipal offices to two school buildings vacated by the district — Floyd Dryden Middle School in the Mendenhall Valley and the Marie Drake building downtown. However, an agreement is in the works to lease Floyd Dryden to tribal and university entities for educational and childcare purposes, while Marie Drake is considered too deteriorated to be rehabilitated as office space at a reasonable cost.

Instead, Assembly members on Monday — in addition to approving negotiations for the Burns building — gave an initial go-ahead for city administrators to gather more information about options for Marie Drake that could include demolishing at least some of the building in order to create parking space.

That could help address a notorious shortage of parking in the area that could be made worse if CBJ relocates offices for 160 workers to the Burns building, since the agreement only includes 88 parking spaces near the building and employees’ contracts specify parking will be provided for them. The existing scarcity of parking is due largely to the consolidation of nearly all students in grades 9-12 into the nearby Juneau-Douglas High School: Yadaa.at Kalé starting last August.

Koester said the city may have to explore off-site parking options, such as the lot next to Centennial Hall where the new City Hall was proposed.

“We provide parking now,” she said. “Can we provide convenient parking for all of our employees? We’re still working through all of that. Parking is a challenge for most developments in downtown Juneau.”

• Contact Mark Sabbatini at mark.sabbatini@juneauempire.com or (907) 957-2306.