Anchorage Assembly gives go-ahead for muni to purchase $35M City Hall building
The Anchorage Assembly gave the municipality the green light Tuesday to pursue the purchase of the building where the city has done much of its business for more than 45 years.
Since 1979, the municipality has rented City Hall at 632 W. Sixth Ave. Annually, the city pays about $4 million in rent and operational expenses. The current lease, signed in 2001, expires at the end of this year but includes a purchase option, Chief Administrative Officer Bill Falsey said at Tuesday’s Assembly meeting.
Anchorage Public Private Partnership, part of longtime Alaska real estate developer Mark Pfeffer’s portfolio, currently owns the building. Falsey said the landlord told the city it was paying under market rates on the $28.5 million valued property, which includes the building and parking lots.
Without adjusting for inflation, Falsey said, the municipality has paid more than $60 million in rent since it first came to lease the space.
“It looks to us, as we were analyzing the possibilities, there’s just no reason to keep doing that in perpetuity,” Falsey said.
Now, with the Assembly’s approval, the municipality will go forward with the purchase option and utilize a 30-year leaseback transaction. The $35.5 million purchase, which includes some renovations, will look like annual rent payments to JP Morgan Securities, which will loan the city the funds until the debt is paid, Falsey said.
In total building costs, the municipality will pay $2.4 million toward the debt, plus $1.3 million in operation and maintenance costs, according to an Oct. 21 Assembly memo. This would result in about $300,000 saved annually.
Ownership of the building will decrease how much the municipality pays in property taxes, insurance, operation and maintenance costs. Falsey said the city could also consider “a number of efficiency changes” to the physical building.
“A good part of our current contractor’s day is spent changing light bulbs because none of the fixtures in that building have been updated to LEDs,” Falsey said. “I think we would make those kinds of capital decisions while saving time on the maintenance side and in long term utility costs.”
The financing also includes the cost of a new roof and a fire alarm system and other building renovations.
The municipality moved into City Hall, formerly the Hill Building, in 1979 as a result of the merger between the City of Anchorage and the Greater Anchorage Area Borough. Initial lease payments in 1979 were less than $100,000 per year, according to Daily News archives. The lease, which included an option to buy, came to 63 cents a square foot, according to a June 1979 story.