Assembly authorizes staff to enter negotiations to purchase two floors of Burns Building; appraisal $9.3 million

The Committee of the Whole on Feb. 24 gave the city manager authority to enter negotiations with LNB Corporation (manager for the Alaska Permanent Fund Corporation real estate portfolio) to explore purchase of two floors of the Burns Building and associated parking.

Manager Koester reported an independent appraisal of the two floors plus 88 parking spaces at $9,300,000. City assessment records show a higher assessed value (approximately $11,020,000 with the parking included). Manager Koester described a preliminary 10‑year payback scenario previously compared to renting: owning two floors plus improvements could have significant up‑front costs but would eliminate long‑term rent and allow co‑location of staff.

Why this matters: the city has been exploring ways to consolidate downtown city staff, reduce leasing costs and secure long‑term municipal space. The proposed transaction would create a city‑owned downtown footprint and has operational implications (notably parking and building maintenance). Manager Koester said that, if pursued, the city would also manage condo association terms and that the lands/finance and legal terms would return to the assembly before any final purchase or appropriation.

Assembly action: the assembly voted 8–1 to authorize staff to enter negotiations and send the attached letter of intent to LNB Corporation using the appraised value as a starting point. Multiple members asked about parking capacity (88 spaces), whether sufficient off‑site parking arrangements exist for staff, and the potential need to make findings if the city were to pay above appraised value. Manager Koester said any final purchase would return to the assembly for appropriation and that staff would negotiate condo association documents and maintenance arrangements.

Clarifying details: the appraisal covers the two floors and the parking lot portion identified (88 spaces); condo association annual dues in earlier analyses were estimated around $650,000 in one scenario, and an earlier rental scenario used a rent estimate of $2.85 per square foot; staff noted those figures are preliminary and would be refined during negotiations.

Next steps: manager authorization allows staff to send a letter of intent and begin negotiating terms. Any final purchase contract, condo‑association agreement and appropriation would come back to the full assembly for approval.