On July 3, ADOT advertised that they would accept bids for demolition of three Government Hill properties — two homes and the Sourdough Lodge- in the planned bridge right of way. The bid will open July 25.
In a press release, Stephanie Kesler, president of the Government Hill Community Council, said,
The Alaska Department of Transportation is trying to show momentum to build a bridge when there is essentially no chance of getting a necessary federal loan, and [House Bill] (HB) 23 said the bridge can’t move forward without that loan. Demolishing viable homes unnecessarily is not consistent with HB 23, and is an unconscionable destruction of our neighborhood. At a minimum, each of these three properties should be evaluated for future use, and no demolition or removal of viable structures should occur unless the bridge is financeable. This is a terrible way for the state to make a point that it’s moving forward with a questionable project.
HB 23 reduced the Knik Arm Bridge and Toll Authority (KABATA), a state agency, to little more than a toll collector. As part of the bill, all of KABATA’s property, including the three properties scheduled for demolition by the state, was transferred to ADOT effective July 1, 2014.
In a later email, the Council wrote, “We strongly feel that demolishing the properties are [sic] contrary to the spirit of… HB 23 which states that no new additional properties can be acquired unless the project receives a federal [Transportation Infrastructure Finance and Innovation Act] (TIFIA) loan.”
To examine the Council’s point, it is necessary to turn to the legislative record. On April 12, Sen. Johnny Ellis (D-Anchorage) offered an amendment to HB 23. During floor debate,Ellis called it the “No more right of way acquisition or destruction of properties already purchased during the right of way process until TIFIA financing is secured” amendment.
Ellis, who represents Government Hill, described it as one of Anchorage’s historic neighborhoods. But Government Hill had been stressed by KABATA and its use of eminent domain, he said. Only after negative publicity did KABATA back down from plans to demolish a Government Hill Subway restaurant and Tesoro gas station.
The three properties scheduled for demolition were acquired through a willing buyer and seller, which raises questions about what role KABATA’s power to invoke eminent domain may have played in the transaction.
KABATA had indiscriminately crossed private property in Government Hill to “try to show forward momentum” on the bridge project, said Ellis during Senate floor debate. He continued,
I don’t believe that we should ever give the power of eminent domain for right of way acquisition to un-elected parties. That was offensive to me, Mr. President, on principle. I know a number of folks in this chamber have said that they are respecters and defenders of private property rights, and that’s a very, very important consideration for the people I represent and should be something that we respect- private property rights and control of property. The power of eminent domain should be used very sparingly and only directly related to people who have been elected to these positions of public trust.
“The citizens of Government Hill should not have to live next to leveled residences or empty lots,” said Ellis. Seizure and demolition of buildings before achieving full funding for the bridge was premature, he suggested, concluding, “Let’s do things in the correct sequence.”
Sen. Lesil McGuire (R-Anchorage), a proponent of the bridge, spoke in opposition to the amendment, fearing it would slow progress. This prompted consternation from Sen. Hollis French (D-Anchorage), who said, “I guess I’m astonished that there’s any opposition whatsoever to this amendment because it makes perfect sense to not take someone’s land, not take someone’s home, not take someone’s business, not take somebody’s property until you know you’re going to go forward. That’s extremely serious.”
Like Ellis, French seemed to challenge the conservative bona fides of his colleagues, saying, “It’s worth pointing out in a very generic sense that we have bent over backwards at other moments in this body to restrict the powers of eminent domain in a lot of different settings because we recognize the enormous power it is to take someone’s property.”
After an at ease prompted by Sen. Anna Fairclough (R-Eagle River), McGuire offered an amendment to Ellis’s original amendment that speaks to ADOT’s current arguments for demolition. Said McGuire during debate,
The reason that the KABATA authority was further objecting to [Ellis’s amendment] was the concern they have for the fact that they already have acquired some physical property in preparation for this project that has been abandoned. And some of these properties have, for example, broken windows and things that might pose a danger to community members. And their concern is they may be required to dispose of or destroy those properties as a result of keeping public safety there in Government Hill, the very thing we’ve been talking about. With this amendment not being amended today, Mr. President, they would not be able to go ahead and do that.”
Ellis described McGuire’s change as a “friendly amendment.” Though it did not give him everything he had wanted, “It’s an example of us trying to work together on the floor as a committee of the whole,” he said. With that moment of bipartisanship, the amendment was adopted unanimously.
The House did not accept HB 23 as amended by the Senate. In a procedural attempt at expediency, the House asked the Senate to recede from its amendments. The Senate unanimously declined.
The Senate amendment on eminent domain did not make it into the final bill approved by the conference committee, which was formed to wed the House and Senate versions of the bill. However, when Sen. Berta Gardner (D-Anchorage) asked about the provision in conference, Hillary Martin of Legislative Legal Affairs explained its removal was only because of a perceived conflict in bill language.
In the hectic last hours of the legislative session, senators did not have a chance to fully review the conference committee changes to determine if their will with regard to eminent domain was fully expressed in the bill. However, their intent was plain from their unanimous amendment and debate; the Senate did not wish to see further demolition in Government Hill until full funding for the bridge was met.
Ellis and Rep. Les Gara (D-Anchorage) sent ADOT Commissioner Patrick Kemp a letter on July 9 requesting that the state not demolish the properties. Ellis and Gara noted that the assessed value of all three totaled around $2.3 million, money the state could use if they were sold. Since the bridge’s construction is an improbability, given the state’s failure to gain the necessary federal loan that would only cover a portion of the bridge cost, “It is fiscally imprudent to throw away over $2 million when we are facing major budget shortfalls,” they wrote. “In addition to the property loss, you will have to pay for the cost of demolition.”
The state seems to be applying the argument McGuire espoused on the Senate floor: the buildings are too run down to do anything other than demolish. The two houses require mold removal, electrical work, and roof repair, said an ADOT spokeswoman who previously worked for KABATA.
However, the state’s documents, attached to the bid announcement, do not paint the same dire picture. Of the 441 E Harvard home, a January 2013 appraisal for KABATA states, “Overall, the duplex is in fair to average condition with some deferred maintenance noted.” There is no mention of the need for wiring or roof repair.
According to the appraisal of the house at 828 Erickson, done for KABATA in September 2011, the house had been sold only one month prior for over $330,000. Clearly, at that point it was suitable for sale prior to KABATA’s acquisition.
The Sourdough Lodge, which the Government Hill Community Council does not defend, also has life left in it, according to two appraisers. In 2011, MacSwain Associates, LLC, said of the Sourdough, “We found no adverse conditions that affect the performance of the subject hotel. Overall, the subject property is suited for its present use as an economy hotel.” MacSwain added, “Based on the age, condition, and quality of the structure we estimate the remaining economic life to be 15 to 20 years. Note the economic life of a structure can be extended with periodic maintenance and upgrades.”
Another 2011 appraisal of the Sourdough Hotel by Black-Smith, Bethard, & Carlson said of the property, “the remaining life expectancy is 20 years-plus,” and suggested the hotel could be converted to apartments.
Based on these appraisals, it appears that if there has been any significant deterioration of the properties, it happened after they were acquired by KABATA. Now, two days after their transfer to the state, ADOT wants to tear them down.
The rush does not appear justified. ADOT’s own timetable indicates all three properties will be demolished, removed, and the land graded with four months.
The Government Hill Community Council is asking the state to take responsibility and offer the homes for rent, in light of the Anchorage rental shortage, but the state does not want to pay a property manager or relocation fees for renters should the bridge become a reality.
While ADOT has come to own the Government Hill properties and can legally do with them what it wishes, the state would be wise to consider the perception of private property owners throughout Alaska as it flexes its power of eminent domain, one of the biggest of Big Government muscles at its disposal.
Editor’s note: A previous version of this article stated that the three properties were acquired via eminent domain. While KABATA retained the power to use eminent domain, the properties were bought and sold by willing participants.