Special Favors

As Mayor, Begich supported zoning changes that helped a campaign contributor's business make almost $2 million on a real estate deal and he supported a tax deal that allowed a campaign contributor's business to pay hundreds of thousands of dollars less in taxes every year.

As Mayor, Mark Begich supported zoning changes that helped a campaign contributor's business make almost $2 million on a real estate deal.

In February 1998, while Mark Begich was the Chairman of the Anchorage City Assembly, he opposed a proposal that would have changed nine acres of vacant midtown property from a residential to a commercial zone and increased the land value. ¹

In 2002, after leaving the Assembly, Begich worked on a land deal with property developer Jonathan Rubini, receiving $22,500 and an ownership stake in two offices. ²

Since 2003, Begich has taken thousands of dollars from Jonathan Rubini: ³

• On March 14, 2003, Begich took $500 from Jonathan Rubini
   
• On Dec. 9, 2005, Begich took $1,000 from Jonathan Rubini
   
• On March 13, 2006, Begich took $1,000 from Jonathan Rubini

In June of 2002, Rubini's company, JL Properties, purchased the same nine acres of vacant property in Midtown for $1.55 million. ⁴

In February 2004, Mayor Begich wrote a letter to the City Planning and Zoning Commission saying JL Properties should get the rezone:

• In August 2007, the Anchorage Daily News reported, "By now, he [Mark Begich] was mayor. He wrote a letter dated Feb. 2, 2004, to the city Planning and Zoning Commission saying JL Properties should get the rezone.
  
  "To [Alaska corruption watchdog, and potential 2008 Democrat Senate candidate Ray] Metcalfe, this was an about-face -- Begich changing his mind to benefit his business partners.
  
  "Begich says that he was consistent -- he had supported the parks advocates, and he still supported them when they changed their position." ⁵
   
• In August 2007, the Anchorage Daily News reported, "City planner Jerry Weaver said he's worked for the planning department for about 30 years.
  
  "Asked if it's unusual for the mayor to weigh in on a planning and zoning decision, Weaver said: 'It's not commonplace, but he's not shy about expressing his feelings either.'" ⁶

In June 2004, JL Properties sold its property for $3.5 million:

In August 2007, the Anchorage Daily News reported, "JL Properties sold its Midtown land to the federal government as the future site of a National Archives facility in June 2004, Bruce said. The price was $3.525 million -- more than twice what Rubini and Hyde had paid before the city rezoned the land." ⁷

The same company, JL Properties, pushed for a property tax exemption for its military housing project in the State Legislature:

In June 2004, the Associated Press reported, "Anchorage officials are negotiating a deal that could save a local development company millions of dollars in property taxes on a private housing project it built and manages on Elmendorf Air Force Base.

"JL Properties objected to the 2004 tax bill on its $110 million Elmendorf project, the first private military housing arrangement of its kind in Alaska.

"The company pushed a measure through the Alaska Legislature in the closing days of this year's session allowing a special tax exemption to reduce future payments to the city." ⁸

The bill, SB 136, would require the City of Anchorage and JL Properties to negotiate a payment in lieu of taxes:

• In June 2004, the Anchorage Daily News reported, "The company began pushing a measure in the Legislature to change the way the property is taxed. It received little public attention. The bill requires the city and developer to negotiate an annual payment in lieu of taxes." ⁹
   
• The article continued, "Begich said he likes SB 136 because a payment in lieu of taxes guarantees reliable revenue for the city on the existing housing, after the Legislature dangled the threat of a complete base housing tax exemption. He said similar private housing on some bases elsewhere pay no local taxes at all." ¹⁰

Begich supported the deal, which "would enable JL Properties to pay hundreds of thousands of dollars less each year.

• In June 2004, the Associated Press reported, "City officials and the company are considering a deal that would enable JL Properties to pay hundreds of thousands of dollars less each year than it would have had to pay under this year's tax bill. The deal could save the company millions of dollars in taxes over the next 50 years. ¹¹
   
• "Company president Leonard Hyde said that without a tax break, it can't move forward on the second, larger phase of residential development on the base. Anchorage Mayor Mark Begich is supporting the deal." ¹²

On September 7, 2004, the tax break was signed into law:

According to the Alaska State Legislature, on Sept. 7, 2004, SB 136 was signed into law. This bill had a provision that would grant a property tax exemption for housing facilities on military bases. ^13,14

¹ Anchorage Assmbly, Meeting Minutes, Feb. 24, 1998

² Kyle Hopkins, "Sparks Fly On Airwaves Over Begich Rezone Role; Windfall Deal: Two Developers Made Money With His Help, Says Metcalfe," Anchorage Daily News, Aug. 4, 2007

³ Campaign Income, Alaska Public Offices Commission, Mark Begich; Mar. 14, 2003; Dec. 9, 2005; Mar. 13, 2006; Accessed Mar. 3, 2008

⁴ Kyle Hopkins, "Sparks Fly On Airwaves Over Begich Rezone Role; Windfall Deal: Two Developers Made Money With His Help, Says Metcalfe," Anchorage Daily News, Aug. 4, 2007

⁵ Kyle Hopkins, "Sparks Fly On Airwaves Over Begich Rezone Role; Windfall Deal: Two Developers Made Money With His Help, Says Metcalfe," Anchorage Daily News, Aug. 4, 2007

⁶ Kyle Hopkins, "Sparks Fly On Airwaves Over Begich Rezone Role; Windfall Deal: Two Developers Made Money With His Help, Says Metcalfe," Anchorage Daily News, Aug. 4, 2007

⁷ Kyle Hopkins, "Sparks Fly On Airwaves Over Begich Rezone Role; Windfall Deal: Two Developers Made Money With His Help, Says Metcalfe," Anchorage Daily News, Aug. 4, 2007

⁸ "Developer Seeks Tax Break On Elmendorf Project," Associated Press, June 6, 2004

⁹ Ann Aurand, "Developer Seeks Tax Break On Elmendorf Project," Anchorage Daily News, June 6, 2004

¹⁰ Ann Aurand, "Developer Seeks Tax Break On Elmendorf Project," Anchorage Daily News, June 6, 2004

¹¹ "Developer Seeks Tax Break On Elmendorf Project," Associated Press, June 6, 2004

¹² Ann Aurand, "Developer Seeks Tax Break On Elmendorf Project," Anchorage Daily News, June 6, 2004

¹³ Alaska SB 136, Bill History And Action, Became Alaska Law Sept. 7, 2004

¹⁴ Alaska SB 136, Bill Text, 2004 Legislative Session