The ongoing drama in the fate of the Legislative Information Office (LIO) in Downtown Anchorage took another turn Tuesday with a threat of a lawsuit over the deal officially being delivered by the deal’s financiers.
Attorneys for EverBank — the Jacksonville, FL based financier behind the $42 million LIO remodel 3 years ago — sent a letter to the Legislative Affairs Agency saying it is they, rather than developer Mark Pfeffer, who will ultimately be left holding the bag for the costs of the deal should the Legislature find other office space as they have publicly stated they are looking to do.
As a result EverBank says they are demanding the Legislature “reaffirm and establish that the Tenant Lease is in full force and effect, valid and binding on the State, and cease any and all efforts to invalidate the Tenant Lease, vacate the Property, or secure alternate lease premises.”
If the Legislature fails to comply with this demand EverBank says “Breach of the SNDA by the LAA will subject the State of Alaska to liability for damages suffered by EverBank as a result of the breach.”
That is lawyer talk for “we will sue your rear end off.”
How much might EverBank be seeking?
“EverBank estimates that those amounts total approximately $27,500,000 at this time. In addition, if EverBank is required to institute an action to recover damages from the State, under the SNDA EverBank is entitled to recover its litigation costs.”
The letter goes on to outline what appears to be a compelling reason for EverBank’s argument for why the Legislature, meaning the State of Alaska, meaning you and me, will owe them the development costs on the project.
The argument goes like this:
- Everyone doing business with the Legislature on this deal did so in good faith and has the right to assume the Legislature was doing the same.
- It was the Legislature who contracted for the work to be done.
- It was the Legislature’s contracting process, not anything done by the private sector parties in the deal, that a judge found to be improper.
- That means it is the Legislature who did wrong and is now liable for the costs private sector parties incurred to complete to project.
I’m no lawyer, but that seems like a pretty good argument for the State to have to pay up.
It’s unlikely the timing of the letter is an accident.
The Legislative Council —the committee in the Legislature that oversees legislative office space — has publicly voted to pursue purchasing and moving into office space in Spenard (1500 W Benson Blvd) for $12.5 million. The deal is now in a “60-day exploratory phase” to allow legislators to investigate how the building can serve their needs.
This letter appears to be a stern reminder that the in addition to the $12.5 million purchase price and the millions that would be needed to renovate a new building, the Legislature will certainly be facing a lawsuit to recover the full costs of the Downtown LIO deal.
If that scenario plays out It is entirely possible, if not likely, the Legislature will end up spending $55-$60 Million for two fully remodeled Anchorage office buildings, only a portion of one of which they can use.
That apparently is how you “right-size” government.