Rubini, Hyde and another partner who came in on the deal were required to personally guarantee, if necessary, debts the partnership took on. They also agreed to contribute more capital if needed.
Stevens was not asked to guarantee notes or promise more money because he was brought in as a passive investor, Rubini said. The senator said he asked for that status because it shielded him from the kind of open-ended financial obligation that had caused his "bad experience" in the crab boat venture.
The deal began in characteristic Rubini fashion, with the purchase of an $11-million collection of what he called "ragtag" properties, whose out-of-state owners wanted to unload. Rubini quickly resold several of the properties to pay down debt.
Among the properties retained were a small office park near the Anchorage airport and a modest two-story office building downtown. Within three years, Rubini said, Stevens' equity climbed to about $250,000.
Stevens also invested $50,000 in a separate Rubini syndicate to acquire an apartment complex in Fairbanks in 1999, records show. Stevens' equity in that property has grown too, Rubini said.
A Federal Contract
Stevens was soon in a position to do a favor for Rubini.
When Elmendorf Air Force Base, immediately north of Anchorage, was selected to participate in a new Pentagon program to privatize base housing, Rubini and another set of partners bid on the $450-million contract in 2000.
The chosen developer would take title to the existing housing, upgrade and expand it, then rent the houses back to service families. At 828 units, the Elmendorf contract was far larger than anything Rubini had built before -- "a big reach for us," as he put it.
Yet with low-interest government construction loans and the Air Force pledging to pay tenants' housing allowances directly to the contractor for the next 50 years, it looked like a moneymaker.
Bittner became an investor in the Elmendorf group that Rubini put together, records show. Stevens did not, and he said Monday that he had been unaware of Bittner's involvement.
The senator said he "strongly supported" privatization because it improved housing for military families and "it would greatly enhance the likelihood that Elmendorf would not be closed in the next round of base closures."
When Rubini sought more time to prepare his bid, Air Force officials noted in their records, he sent the senator a copy of the request.
