Angela Rodell, executive director of the Alaska Permanent Fund, told the editorial board of the Fairbanks NewsMiner last week that Senate Bill 128 might be a tad too optimistic in its premise of how much the Permanent Fund can earn year after year.
Rodell was prescient: She said all that before Brexit happened.
SB 128 is Gov. Bill Walker’s attempt to restructure the Permanent Fund and start spinning off more earnings than it currently does to cover state programs. Not a bad concept, we agree.
However, a consistent draw of 5.25 percent of the market value of the Permanent Fund, as proposed in the governor’s bill, is aggressive. It would yield about $2.5 billion per year for state spending, which sounds like a lot, but 5.25 percent is what Democrats wanted, led by Rep. Les Gara.
But you never know about the markets, as Brexit has shown. The fund would have to earn more than 7.25 percent year after year to be safe under this scenario.
The current global events in Europe show why the Legislature was wise over the past many months to take a cautious and questioning approach to the proposed changes to the Permanent Fund; while the governor said we need to take volatility out of our revenue picture, the actual degree of Permanent Fund stability is exactly what legislators were questioning.
GOVERNOR IS FURIOUS, FUND IS SLIGHTLY DOWN
Gov. Bill Walker is livid, according to those around him. Livid that anyone would question the math on SB 128.
Walker seems to believe that conservative-minded Rodell has given Fairbanks legislators the cover they need to vote against SB 128.
But it’s not Rodell who gave them cover. It was Great Britain.
The Permanent Fund’s current losses may have come just in time to give Walker a wake-up call. The P-Fund was only up 1.2 percent in the third quarter, trailing its performance benchmark return of 2.3 percent. With Brexit roiling the global markets, there is no way the fund can recover enough by Thursday’s close of business to make up the losses.
The balance stands at $52.8 billion right now, slightly down for the year. But check back on Thursday, when the fiscal year ends and the serious number crunching begins.
Cofounder of the Alaska Dispatch, Tony Hopfinger, has a piece of Alaska history written on a cocktail napkin. It’s a piece of old Alaska, when your word was your bond.
Hopfinger needs to keep that napkin safe in a bank vault. Seriously: It’s the contract that Alaska Dispatch now-owner Alice Rogoff signed, saying she’d pay him $1 million for his 5 percent part of the publishing property. It will be in a museum some day, mark our word. Perhaps even in the Newseum in Washington, D.C. if this thing plays out.
In case you missed the first telling of it, Hopfinger filed a complaint against Rogoff for nonpayment on June 15. For him, it’s a lot of money: $1 million, plus some expenses. For her, it’s a nuisance payment.
The bar napkin contract was, it is alleged in the complaint, witnessed by her attorney. If so, it joins others; we found a genuine plethora of bar napkin contracts online that are click-worthy.
LOOKING FOR ALASKA
Alice Rogoff’s deal-gone-wrong is not yet as screen-worthy as the breakneck speed of Arbitrage, starring Richard Gere, where a deal on a cocktail napkin, a few temporary bridge loans, and some fast talk combine to patch together the fictional hedge fund operator Robert Miller’s finances from a cascading series of catastrophes.
Still, it’s a bit of a thriller. This is the woman who arranged for President Obama to come to Alaska last August to dine with her in her home. She’s kind of a big deal. She served him caribou she killed with her bare hands. And berries she picked with her bare hands. And some other things she made with her bare hands.
She’s the woman who engineered Governor Walker’s victory in 2014, after holding a grudge against Gov. Sean Parnell for not properly acknowledging her role in securing the Kennedy Center for Ted Stevens’ funeral.
She’s the woman who has met with Gov. Walker many times over to convince him to use the Permanent Fund in a totally different way, possibly with some kind of arbitrage play.
Sovereign wealth funds, we have learned, can be subject to all kinds of woes, ranging from corruption to mismanagement. The Alaska Permanent Fund has escaped that fate so far, but there are sharks circling. With David Rubenstein managing a part of the Permanent Fund, there could be a movie in this yet.
The Washington Post found the story intriguing and reported about the napkin contract a year ago on July 8:
Rogoff had already tried to establish an Alaskan arts television network and was musing about starting a Web site that would focus on underreported stories about the 49th state when she was introduced to the three journalists behind a year-old online news organization named the Alaska Dispatch. An hour of conversation over buffalo burgers, a handshake and an agreement inked on a napkin led to Rogoff’s purchase of 90 percent of the Dispatch in July 2009. “She gave us this amazing opportunity to open offices and hire … a team of people willing to take a risk,” said Tony Hopfinger, who had been running the site out of a spare bedroom. Over the next five years, about 30 reporters and sales staff came onboard.
TWENTY DAYS IS NEXT WEEK
According to Alaska law, Rogoff has 20 days to respond to the complaint. That gives her until the first week in July, if you exclude weekends. The judge assigned to hear the case is Andrew Guidi, who has a good reputation in Alaska.
Has Alice ever been sued before? Not that we can find. She may need some technical assistance; we’re here to help.
Will Alice counter-sue Hopfinger? She has her reputation to consider. If she doesn’t settle soon, the we can expect a civil trial between now and the election of the next governor, an event for which she has shown keen interest. And there’s still the matter of the still-owed bridge loan that she took out from Northrim Bank, which is no doubt watching her closely.
A lawsuit, with its uncomfortable depositions that would be made public, could throw a wrench in Rogoff’s plans for Arctic domination, or at least legacy.
And there is the question as to whether David Rubenstein, her husband and one of the richest men in the world, will let her hang out there with her first true comeuppance in 64 years? We talked to someone close to the family who said that if he had planned to bail her out, he would have done so by now.
Is the story dead? Not hardly. Word is out the Los Angeles Times is now poking at the coals, and that Bloomberg is blowing on the embers.
Following up, the Washington Post had this. Not the kind of greenhorn legacy that Rogoff was seeking, but good material for a documentary.
After the City and Borough of Juneau was served with a lawsuit by the cruise industry in April, it seemed both sides would reach an amicable agreement. After all, the industry was merely trying to achieve certainty in how marine passenger fees are spent and only resorted to federal court after its pleas to resolve the issue were largely ignored by the city.
City Manager Rorie Watt promised to “keep the lines of communication open” and appeared to be open to negotiation. Since then, however, Watt has been openly dismissive of industry concerns that unbridled taxes make the city a less competitive cruise destination. The CBJ Law Department has taken a series of actions signaling unwillingness to compromise and discouraging efforts at reaching a settlement. This is a mistake.
For readers who haven’t followed the issue, the cruise lines contend CBJ is spending fees collected from its passengers on projects and services unrelated to any direct benefit to passengers and their ship — a violation of state and federal law and the U.S. Constitution.
Their lawsuit asserts the city has collected and misspent over $41 million in fees since 2001, including $22 million on general governmental operations and another $2 million on city bus service. Further, CBJ has allocated $10 million to build a man-made island, elevated walkways, a city park and infrastructure to support a whale sculpture over a mile from the cruise ship docks.
City officials point to a recently completed state audit as proof that passenger fee proceeds are being spent correctly. However, the audit doesn’t mention or examine the use of fees that are the subject of this lawsuit.
While it is puzzling the city had not secured an independent legal opinion before this, the Assembly took the correct action in initially authorizing the expenditure of up to $50,000 for this purpose.
BRING IN THE LAWYERS
Then things starting going awry. The CBJ Law Department hired a law firm to represent them and invited former mayor Bruce Botelho to become part of the defense team. This represents a huge conflict as Botelho in his previous position as mayor was arguably the prime promoter of the current policy that led to the lawsuit.
Bruce Botelho, (360 North image)
While Botelho’s knowledge of the history may be useful, it’s difficult to see how the city will receive independent legal advice when one of the defense team members will be naturally predisposed to staunchly defend the city’s past policy, rather than negotiate a settlement.
Next, in a highly questionable move, the city decided it could pay for legal defense costs with marine passenger fees — suggesting if the city loses the lawsuit, cruise passengers will be deprived of the use of future parks and walkways “created” for them. Therefore, the cost of defending this lawsuit “benefits” them. This convoluted reasoning sets up a situation where the city’s legal team has no incentive to settle and feel they can litigate this to the Supreme Court, if necessary, since it isn’t their money they are spending.
Next, in a procedural ploy that will only delay resolution of this matter, the city filed a motion to dismiss the lawsuit claiming federal courts lacked jurisdiction and the matter should be adjudicated in state court. This seems pointless since, regardless of the outcome, the decision will surely be appealed and eventually end up back in federal court. However, in order to accomplish this, the city was forced to argue in their motion that marine passenger fees are not actually “fees” but a “tax” collected “for the general benefit of the community.” The argument undercuts the city’s own lawsuit defense and bolsters the industry’s contention the fees are not specifically benefitting cruise passengers and their ship as legally required.
This kind of legal mumbo-jumbo and maneuvering is hard to understand. The city could fight this for years and, at best, in the unlikely event they win every argument, they will have only preserved the status quo. Is that worth the risk of losing the use of all passenger fees?
Legal arguments aside, there’s so much more at stake here. Disputes between business partners that end up in court rarely result in one side or the other really winning. In the real world, it usually means the business and relationship are damaged beyond repair and any legal victories seem hollow in the bloody aftermath. Gearing up for a long, expensive legal battle with one of our largest and most important community economic partners is short-sighted.
Everyone’s interests are best served by an expeditious and mutually agreeable out-of-court solution to this dispute. A similar lawsuit between the state of Alaska and the cruise industry was wisely settled out of court in 2010. It is perplexing why our city leaders cannot see the wisdom in doing likewise.
• Win Gruening retired as the senior vice president in charge of business banking for Key Bank in 2012. He was born and raised in Juneau and graduated from the U.S. Air Force Academy in 1970. He is active in community affairs as a 30-plus year member of Juneau Downtown Rotary Club and has been involved in various local and statewide organizations.
Craig Medred, who writes about all-things-Alaska at the website with the curious moniker, CraigMedred.news, picks up where Must Read Alaska left off in describing the tangled relationships and complicated history of the elusive Alaska gasline project.
And the Alaska Journal of Commerce adds more information about the Walker Administration’s takeover of the AK-LNG project, a story first broken by APRN energy reporter Rachel Waldholz, and followed up here with an update.
Insiders say that Alaska Gasline Development Corporation President Keith Meyers, who is new at his job, may not have known he was leaking the biggest story of the year when he spoke with Waldholz.
“We need, as a state and as a project, we need to hit that window,” Meyers told Waldholz. “We need to be in service in that window.”
NATURAL RESOURCE COMMITTEE TO PROBE
Others weren’t so sure.
“A lot of people get hurt jumping through windows that aren’t open,” was the response of Larry Persily, an oil and gas advisor to the Kenai Peninsula Borough, who once held the title of Federal Gasline Coordinator.
The Senate Natural Resources Committee expects an update from Gov. Bill Walker’s gasline team on June 29 in the Anchorage Legislative Information Office. Sources have told Must Read Alaska that outgoing DNR Commissioner Marty Rutherford, whose last day is June 30, has been asked by the governor to not attend the briefing.
Both Senator Cathy Giessel, who heads the Senate commitee, and Finance Co-chair Anna MacKinnon, have expressed doubts about the radical new direction the governor seems to be taking, as reported by Tim Bradner in the Alaska Journal of Commerce.
“We were not informed about this,” Giessel told the Journal of Commerce, regarding the changes Keith Meyers released, while MacKinnon told attendees at Commonwealth North that legislators had been asking the governor for a long time about his intentions but have gotten no answers.
The meeting on Wednesday promises to be interesting, with the new DNR Commissioner Andy Mack taking up the role of lead witness, along with new AGDC President Meyers.
The gas project would be the largest project in North American history is is estimated to cost as much as $65 billion.
Showing impulse control issues in the middle of a work day, city employee Andrew Halcro took to Facebook to respond to Must Read Alaska and dress down former Mayor Dan Sullivan over his effort to build tennis courts, and other things.
In fairness, we are letting the parking czar have his say on city time — with time stamps — while Mayor Ethan Berkowitz is on vacation:
Prudhoe Bay is the largest oil and gas field in the nation. A delicious find for the energy sector back in the 1960s, at 213,543 acres, it’s among the 20 largest and most productive fields in the world. It was a boon for our young state. Prudhoe Bay, it can be argued, built Alaska.
And it might just be on the verge of going south because of the obsession of a governor.
Prudhoe, the field, is divided into leases; leases are combined into units; and units have operating agreements.
This makes the work efficient for both the producers and for the state, which a
ctually owns the mineral rights.
Without agreements and a Plan of Development, we’d have a chaotic arrangement of rigs drilling everywhere like a swarm of mosquitoes on a caribou. Or like Texas in the early days of oil.
In Prudhoe Bay, the Plan of Development for the coming year, which starts in July, was submitted on time by the operator.
WALKER MAKES DEMANDS
But Governor Walker’s Administration has asked for a series of information — some technical, and some marketing — from the producers, as it relates to their gas.
The story was well explained by the Alaska Journal of Commerce in April. Oil and Gas Division Director Corri Feige signed a letter to senior BP Alaska asking a lot of questions relating to a major gas sales project. O&G asked for drilling plans, management of carbon dioxide pulled from Prudhoe, gas balancing agreements, and marketing details for the gas.
BP, the field operator said, in no uncertain terms, that can’t give over the marketing plans because, in fact, that would be an anti-trust violation if the companies even had each other’s plans. BP is not supposed to know what Exxon is doing to market gas, because this is supposed to be a competitive market, not a collusion.
Fiege would not have acted without the direction of the governor. Why, then, has Walker demanded this information?
Why has the Acting Commissioner of DNR decided to leave on the last day of the current lease?
Why did Craig Richards quit his prestigious job as attorney general after only 18 months? Richards is not a quitter. And it has nothing to do with his personal life, which was hinted at in the governor’s press release.
Insiders are saying it’s because Walker intends to default the Prudhoe Bay Unit when it comes due on July 1 and Richards is moving into position on the outside of the administration to eventually assist in litigation.
Marty Rutherford, who has been leading DNR on an acting basis, is reported to want nothing to do with that. Insiders say that she told the governor she was ready to lead DNR, but not ready to default the Prudhoe Bay Units.
Marty Rutherford
Craig Richards, on the other hand, may want everything to do with that, including inheriting the litigation of a lifetime.
NO TECHNICAL BASIS FOR DEFAULT, SO…
Experts say there is no technical basis for defaulting the unit. The technical information has been given over and the field is in production.
The operator BP has done nothing that would harm the unit. If Walker, through his new DNR commissioner Andy Mack, decides to default a working unit, this would be a first. And it has the ability to throw Alaska’s entire economy into the drink.
Further, if Walker decides to default the Prudhoe Bay Unit, it woud be because he intends to nationalize it. At that point, the operator technically has no permission from the owner (Bill Walker) to engage in any activity. What would BP do?
The courts would decide because this would invite a gusher of litigation. And this is where Craig Richards’ latest move is most interesting.
Richards and Walker have made a career of suing oil companies. It was their efforts that stalled the completion of the Point Thomson agreement that former Gov. Sean Parnell helped resolve, which is now in production, giving 10,000 barrels of liquids into the Trans Alaska Pipeline System each day.
Craig Richards (360 North photo)
What is motivating the governor? It’s the gasline. Amanda Coyne, in her much-missed column by the same name, analyzed Gov. Walker back in 2014, and his desire for the state to own the gasline outright. She wrote: “Walker can be persuasive when he talks about taking back the state and about controlling our destiny. But we should all be aware of the risks: And the risks in this case are that what we have now will all be undone.”
Walker’s testimony in 2015, when he was forced to drop his lawsuit against the state (he was now governor and would have been suing himself) hints at his current strategy to put the Prudhoe Bay Unit into default.
WALKER AND RICHARDS AT IT AGAIN?
Any speculation that former Attorney General Craig Richards has fallen out of favor with Gov. Walker is unfounded. As one insider put it, “there’s no daylight between those two.”
Richards will likely go off to a law firm, where he can bring in the bigger dollars, and wait for his required 12 months before working on a lawsuit that has anything to do with his former work as an attorney general. He can practice what’s known as “gardening,” which is tending to the plants who actually do the work directly with the state or on topics he would be forbidden from tackling directly. Twelve months is a drop in the bucket for litigation of this magnitude.
MARCIA DAVIS UP NEXT
Word has it the governor will likely appoint Deputy Chief of Staff Marcia Davis as the new attorney general. With her, and with Andy Mack heading up DNR, he’d have his compliant team in place.
Davis worked tirelessly to elect Walker and cut deal with the Alaska Public Offices Commission staff after she was popped for organizing campaign groups that essentially laundered money from a fake nonprofit Davis set up in 2014 with two other Walker supporters. They raised and spent $50,000 to defeat Governor Parnell and install the Walker-Mallott Indie-Democrats into office, they did so at the 11th hour of the campaign. They didn’t disclose their sneak attack, but APOC learned of it and went after them.
The penalty was reduced by over 90 percent because APOC determined that Davis was an “inexperienced filer.” This inexperienced filer may be our next attorney general, because she is close with both Walker and his Chief of Staff, Jim Whittaker.
“This whole play is to squeeze the oil companies to do what he wants them to do in relation to AK-LNG,” one insider said.
18 MONTHS, SIX DEPARTMENTS, 14 COMMISSIONERS
Walker is now at the 18th month mark of his term. He is already on his third DNR commissioner, third Corrections commissioner, second Public Safety commissioner, second Education commissioner, second Attorney General, and second AGDC president. Must Read Alaska has learned that at least one other commissioner is halfway out the door.
Tomorrow (June 25) was set to be the last Saturday Anchorage shoppers would have been able to park free along the streets downtown.
That’s because the Anchorage Community Development Authority, which manages downtown parking meters and garages, came up with a comprehensive plan to increase parking meter rates by 40 percent, and institute paid parking on Saturdays for the first time in Anchorage history.
The Saturday parking fees were meant to discourage downtown workers from parking on the street, thereby opening up more parking for shoppers.
The other rate changes include higher fees for parking lots and garages — increases that make downtown less of a shopper’s paradise and more of hangout for the homeless.
But in a classic Democratic bait-and-switch fashion, Mayor Ethan Berkowitz has weighed in. He nixed the Saturday parking meter heist. This makes the people feel like they “won one.” We’re hard pressed to believe he didn’t know about the entire plan in advance; if he didn’t, his staff has gone rogue on him.
BLOWBACK: WORKING PEOPLE VS. HALCRO
After a year of study, the Anchorage Community Development Authority might have considered more fully the blowback that would result from metering Saturday shoppers.
If the idea was, as stated by ACDA, to penalize downtown retail workers by forcing them into garages and lots, then it was a low blow against the working class — the shopkeepers, the servers, the cooks, and the cleaners.
To mitigate this public relations disaster created by ACDA, Berkowitz, who is on vacation, wrote to ACDA chair Dick Stallone, saying that Saturday parking meter fees would have “unintended, negative economic impacts.”
ACDA’s Brian Borguno, who runs the EasyPark program for ACDA, told the Alaska Dispatch he’ll respect the mayor’s request — for now — but his EasyPark officers will “still strongly encourage” people to feed the meters on Saturday.
Some observers viewed this as an act of insubordination with the mayor, who has just stated that he is concerned about the impact. Having EasyPark officers bully shoppers for quarters is not a welcome mat for downtown. And it sends a message to downtown workers that the city doesn’t care about the cost of actually working downtown.
Parking garages downtown are already underused, but perhaps raising the prices on them will drive more traffic in? We’re not the experts, but the more you tax something, the less you get of it.
Andrew Halcro, director of the Anchorage Community Development Authority for Mayor Berkowitz, was not pleased and commented on the previous story posted on Must Read Alaska, saying this:
You really have no idea what the hell you are talking about, but it’s not the first time Suzanne Downing has stuffed both feet in her mouth. First. the Mayor had nothing to do with the parking rate increase, it was a decision approved by the board of directors. The decision was made after five months of significant stakeholder meetings and presentations to downtown groups. Second, it’s the first parking rate increase in eight years. That’s eight years and we’re still one of the lowest cities in the country. Third, Saturday enforcement was asked for by the downtown business owners who were tired of their customers not having a place to pack because downtown employees were taking up street spaces for eight hours a day. You really put out a lot of misinformation on your feed, and it’s done intentionally to draw attention away from how your legislators are wrecking Alaska’s economy. Please, just stop with your lies.
We’ll forward his comments to the mayor, so that he knows without a doubt that he has no say in parking rate increases.
Halcro is correct in stating that rates haven’t gone up in eight years. The last rate hike was, indeed, during the Begich Administration.
When now Super Lobbyist Begich was mayor, the ACDA was a losing entity. The Dan Sullivan Administration changed the board makeup and the fiscal dynamics of the parking authority, so that it became a profit center. Hence, there was no need to raise rates.
THE MOST EXPENSIVE PARK IN TOWN
The city’s new urban park, which is now in place on the top of the 5th Avenue Garage, has just been launched by the Berkowitz-Halcro Administration. And it’s cute, there’s no question about that. A great place to play hacky-sack about three months out of the year. Perhaps there is no fountain, but there’s also no fountain in the city’s Towne Center Park — the mayor had that torn down last month.
The cost of the new Parking Garage Park is at least $11 million. That’s because $11 million is the actual cost to the taxpayer of building those 220 parking spaces. Spaces so poorly used that the mayor decided to turn them into a game room.
Andy Mack has been named the new commissioner of the Alaska Department of Natural Resources. Mack comes from PT Capital, an investment firm that is closely associated with the publisher of Alaska’s largest daily newspaper, the Alaska Dispatch News.
In a day when both his DNR commissioner announced her departure, and his attorney general did the same.
Mack was heavily involved in the coastal zone management fight, as a proponent of it, and assisted drafting the regulations for the Chukchi Sea. He was with the North Slope Borough for many years.
This is the third DNR commissioner in 18 months for Governor Bill Walker. Mack’s appointment must be approved by the Alaska Legislature, but he will serve for the better part of a year before those confirmation hearings can take place. He cannot be confirmed during special session that will convene in July.
Outgoing Department of Natural Resources Commissioner Marty Rutherford has stuck the landing. She was appointed by the governor today to a seat on the Permanent Fund Corporation Board.
Marty Rutherford
Alaska Governor Bill Walker’s press release slipped in the fact that Rutherford is leaving DNR, following the footsteps out the door of her predecessor, former Commissioner Mark Myers, who left in March.
“Alaska is fortunate to have someone of Marty’s experience and caliber on one of the state’s most important boards,” Walker said. “For nearly 30 years, Marty has helmed various important projects, including the gasline. Her knowledge of various topics and inimitable ability to connect with anyone she meets has inspired the utmost respect of people statewide—from the legislature to the industry.”
Insiders say Rutherford is unhappy with some of the ethical decisions of the governor. In her statement, she did not heap praise back on Walker, but instead thanked her colleagues more generally.
“This is bittersweet for me. I was born and raised here in Alaska, so it’s truly been an honor and great privilege for me to give back in some small way to the state that has given me and my family so much. In the three decades that I have served in state government, I’ve gotten to know some incredibly talented and dedicated public servants. I will miss working day to day with my friends and colleagues, but I know that everything we have worked on together is in very capable hands,”
Rutherford’s father served on the board from 1987 to 1995. Public board members receive a $400 per day honorarium, plus travel and per diem, when working on board business.
Alice Rogoff’s deal-gone-wrong is not yet as screen-worthy as the breakneck speed of Arbitrage, starring Richard Gere, where a deal on a cocktail napkin, a few temporary bridge loans, and some fast talk combine to patch together the fictional hedge fund operator Robert Miller’s finances from a cascading series of catastrophes.
According to 
WHALE OF A COMPLAINT COULD BE SETTLED
Prudhoe, the field, is divided into leases; leases are combined into units; and units have operating agreements.
