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Railroaded?

In August, 2019, the Mat-Su Borough School District Administration submitted a proposal to the Mat-Su Borough School Board to buy the building that houses the Mat-Su Central School. The owners offered to sell the building to the school district for $5.1 million. The Mat-Su Central school (which is a correspondence school) has been located at 600 E Railroad Avenue in downtown Wasilla – close to the location of the old train depot – for approximately 20 years. This large building, which was recently remodeled, also houses the Mat-Su Legislative Affairs office. The School Board voted NOT to purchase the building and the lease was extended in Feb 2020 for another three years (with options to renew). The MSBSD’s annual lease payment is over $500,000 per year.

Here was the listing from 2018:

The building’s owners – “Wasilla Station LLC” – finally found a buyer this past Spring. The building was purchased in March, 2020, by “600 E. Railroad Avenue LLC,” a newly formed corporation which is 100% owned by Dr. Tony Nimeh, a Fairbanks urologist.

It is unclear what Dr. Nimeh paid for the building in total, but he took out a $4.350 million mortgage from Northrim Bank. I am guessing he probably paid $500,000 or more in cash as a down payment too.

AIDEA GETS INVOLVED:

This item is on the agenda of the AIDEA board meeting this morning. Loan Resolution No. L20-03. Basically, AIDEA proposes to participate as a lender for 90% of the financing of the building – substituting for Northrim Bank. Northrim will still be participating in the loan – just a smaller portion. See details below.

NOTE: Not sure how AIDEA can claim they are saving 47 jobs when those jobs are likely the staffers at the Mat-Su Central School and the Legislative Affairs office who would still have their jobs even if their offices moved locations.

MATSU MUCKRAKER MATH:

Here is what is really interesting. “600 E Railroad LLC’s” payments for these combined loans (as shown on AIDEA’s paperwork) will equal $23,000 per month or $277,155 per year. The total amount financed is $4.350 million and the interest rate for AIDEA’s portion is 3.5%.

However, the State of Alaska is paying more than double that amount in lease payments to “600 E. Railroad LLC.”

The Mat-Su Borough School District is paying over $500,000 per year to rent the building (the amount is 520K for fy21 and increases to 553K by fy24) and the State Legislature is paying approximately $180,000 per year in rent. Thus, the new buyer of the building gets a guaranteed $700,000 plus per year in income.

$522,195.00 plus $180,000 = $702,195.000 MINUS $277,155 equals $425,040 in net proceeds per year to the new owner of the building.

NOTE: Of course, the buyer has to pay the property taxes, which are approximately $50,000 per year plus utilities and janitorial and maintenance costs too. The MSBSD estimated the maintenance costs at $1.3 over 20 years or or 65K per year. And he probably did put cash money down, but there is no way to verify this.

Here is the MSBSD’s renewed lease for the building:

I looked for the cost of the Legislative Affairs lease and found this – a few years dated – but the lease amount is about the same today – approximately $15,000 per month.

MORE BACKGROUND INFORMATION:

Here was the MSBSD’s presentation about the potential purchase last August:

QUESTIONS:

Should the Mat-Su Borough School District or the State of Alaska have purchased this building?

Should AIDEA participate in the loan?

How did any of this help Alaskans? Tax dollars are basically paying for this building but the public does not own it.

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