Mysterious third parties, very helpful politicians, terrible eBay salesmanship, chartered $10,000 hunting trips to Russia, and stuffed Elephants in Valdez(really) - just another day in Alaskan politics.
More simply: once again, an attempt at "reform" ends up costing the state money and helping out a few friends.
update #1: I had the state's original purchase price as $26 mill, not $2.6 mill. Now fixed.
This post from Douglas DeClue and this piece in the Washington Post, together with my intense irritation over the claim that listing something on ebay prepares you for national leadership, led me to do some digging, analysis and dot-connecting of my own.
Prepare yourself for another colorful saga of deception, corruption and incompetence in the Wild, Wild North.
Let's begin with the famous ebay listing itself. All of us - except possibly John McCain - now know the plane was listed in Dec 2006, but not sold. What I haven't seen highlighted is
this:
"One serious offer was posted, for a similar price, but the deal fell apart when the state hesitated on the terms and the prospective buyer found another jet, said Dan Spencer, director of administrative services for the Public Safety Department."
The State in other words actually had a buyer on the hook, with obvious means to make the purchase(they bought another jet instead) and willing to pay an asking price "similar" to the $2.6 million paid by the state the year before (a fair one, apparently - the turboprop, while over 25 years old, had recently been overhauled, according to the WaPo article). But then the state quibbled over terms and blew the sale. Since the state ended up selling the plane eight months later at a discount of over half a million dollars, and likely paid at least two additional quarterly lease payments of $62,500, this turned out to be a very costly mistake - at least, from the point of view of Alaskan taxpayers.
As should not surprise anyone who's undergone shock immersion therapy in Alaskan politics the last week, the story of what happened next is already beginning to cloud:
It remains unclear just who brokered the sale of the jet. According to a contemporaneous account in the New York Times, Dan Spencer, director of administrative services for Alaska's Public Safety Department, said it was the Republican speaker of the Alaska House, John L. Harris. Other local accounts suggested that an aviation brokerage firm took the lead.
(WaPo again)
But is it really so hard to learn the proper sequences of events?
An ADN article from August 2007 is very clear:
First, the state hired a third party to find a buyer:
After trying to sell the more-than-20-year-old Westwind II on eBay, the state hired an aircraft broker — Turbo North Aviation — to find a buyer.
Then, John Harris, R-Valdez and Speaker of the Alaska House, found a buyer on his own, without any help from Turbo, at a political function:
Rep. John Harris, R-Valdez, said he met the businessman a couple of years ago and the two recently attended a military appreciation dinner together. There, Reynolds mentioned he was interested in getting a jet, said Harris, who is speaker of the state House.
"I said, well, you know, the governor’s got a jet for sale. They’ve been trying to sell. Why don’t you look at that?" Harris recalled.
Reynolds said he did just that.
As Douglas Declue points out, Reynolds had by that time already made a campaign contribution to Harris through his wife. (The WaPo article says Reynolds also contributed to Palin, but this may be a misreading based on the contribution to Harris.)
Harris' bio shows he attended the Spartan School of Aeronautics in Tulsa, OK. He also lists "flying" as the first of several interests, so it's logical the subject of the jet would have come up in conversation with Reynolds.
The real question is, why did it all take so long? Why was a third party needed, when, according to a
8/25/07 APRN (AK public radio) podcast, Harris knows Reynolds, a local businessman, "quite well". Why didn't Harris bring the subject up to Reynolds sooner?
For one thing, Sarah Palin isn't ready to be an eBay merchant, much less Commander in Chief. According to this
ADN article from April 2007,
The state has tried selling its unwanted jet online four times and failed. So last week, the Palin administration signed a contract with an Anchorage aircraft broker who thinks he can succeed where eBay couldn’t. "The eBay thing didn’t work out very well," said Dan Spencer, director of administrative services for the Department of Public Safety. He’s the person charged with trying to get rid of the infamous Westwind II. The administration made a deal last week with Turbo North Aviation, promising the broker a 1.49 percent cut of the selling price.
As a company, Turbo North sounded solid, and the deal very promising indeed :
Robert Heckmann owns Turbo North Aviation. He said his company has sold more than 1,800 planes — including two dozen or so jets — in the past 27 years.
Spencer said Heckmann suggested the asking price of $2,450,000, based on the current jet market.
"The state’s definitely not going to give this plane away. If that was the case, then they would have sold it on eBay," Heckmann said. He described prospective buyers as "governments, corporate entities, oil companies, movie stars, well-to-do people."
Turbo North Aviation's
website no longer exists: a page for them on Aircraft Shopper Online, showing local phone and fax numbers and a po box at the Anchorage Airport Annex, shows no current aircraft for sale.
Even though Turbo North Aviation apparently never found any "governments, corporate entities, oil companies" or "movie stars" to buy Alaska's albatross, it stayed a party to the eventual purchase of the jet by Harris: per the same ADN article linked above:
Turbo North owner Robert Heckmann warned Friday that the deal with Reynolds hadn’t closed yet, so it wasn’t a sure thing.
"We have a contract from Turbo North Aviation with Mr. Reynolds, but there’s been no hard money put up," Heckmann said.
Why Heckmann's deal with Alaska apparently allowed him to get paid his 1.49% commission on the $2.1 million sale, despite not having located Reynolds (or any other buyer) over the prior four months, is another good question for the taxpayers of Alaska to ask.
But who is Larry Reynolds, Valdez business owner, and Sarah Palin's angel? The podcast from APRN is a fascinating in-depth look at a lively and colorful character: all quotes that follow, except where otherwise noted, originate there.
Originally from Texas, Reynolds, "the man who wants to change the economic landscape of Valdez", claims to have "killed more than 300 species of game around the world". His offices in downtown Valdez display a small sample of his trophy kills: "stuffed lions and elephants and such". Thanks to "quietly expanded eligibility requirements", Valdez is now a HUB (Historically Underbuilt Business), which allows local businesses to apply for "non-competitive government contracts". As Reynolds himself says, Valdez is now a "very lucrative investment", and Sam Dickey, the Hub Zone Liaison in the AK SMA, is only too happy to come to Valdez and help with the paperwork on "condominiums" and a "ski resort" for local entrepreneurs.
Most interesting is the kind of local enterprise Reynolds himself is bringing to Valdez, courtesy of the state's discounted eBay plane: Reynolds now flying high-income big-game hunters to
Russia:
For about $10,000, an outdoorsman -- a rich outdoorsman -- can buy passage between Anchorage and Petropavlovsk, a trip of about 4 1/2 hours, Reynolds said.
The Russian Far East is a popular destination for hunters and anglers, and the timing for a charter air service to take them there couldn't be better, Causey said.
"We have a horrible time flying with firearms now," he said. "One of the enormous appeals of this is not having gun problems."
Hunters won't face the delays, limitations and scrutiny that come with flying commercially with guns, Causey said.
They'll also get to Russia more quickly by flying from Anchorage, and Reynolds says he's worked things out with Fish & Game to have agents come to his hangar on Carl Brady Drive to inspect the heads and racks hunters bring home.
The little turbo-jet no one wanted is now helping fly wealthy hunters to Putin's Icebox, with a little help from hospitable Alaskan government officials and some very generous (and forgiving) Alaskan taxpayers.