Gov. Bill Walker has bravely announced huge cuts in Alaska's operating and capital budget. These cuts will impinge upon my favorite programs. Just like you, I'm one of those much maligned "special interests." My special interests may be different from yours, but we all have our favorites for state funding. Most of us advocate those interests with our governor and legislators.
Alaska Pioneer Homes are my special interest. Why? Because my mother, Brideen Crawford Milner, was well cared for by both the staff of the Palmer home, then the residential division, and ultimately the nursing division of the Anchorage home. Mom died surrounded by family after a full life in growing her Irish clan, and excelling in banking, business and politics. She, like many pioneers, made huge contributions to Alaska. My grandmother, Rachel Crawford came to Alaska in 1898 and my grandfather, Pop, came to Alaska in 1902. Our family has been investors in Alaska real estate, banking and mortgage banking businesses since 1949.
My wife Terri's mother, Anne, is a resident of the Anchorage Pioneer Home. I hope I'm in as good a shape at the age of 94. She receives great care. As a trained husband, I want to see it continue.
Our state faces an arduous fiscal reality with the decline in oil production matched by huge discounts in price. So I began thinking last year about how to stabilize the Alaska Pioneer Homes system. My goal was to boost income but not state contribution, and secure the homes' operations, maintenance and facilities in Anchorage, Fairbanks, Palmer, Juneau, Sitka and Ketchikan for the next 25 years.
I presented a plan to the Walker administration, which proposes to buy each home in Alaska and lease it back to the state for operations. This is similar to the ConocoPhilips lease-back of its headquarters building and Anchorage's lease-back of City Hall. With the Anchorage home as the first example, the purchase would bring $75 million to state coffers on the sale.
But the problems of pioneer homes are not just having cash on hand. We have that in many different pockets of Alaska government. The rainy day planning by the Legislature has been quite good, providing a fiscal cushion to work through our production and pricing problems while not crushing the economy. But, we can't just keep raising the rent to unsustainable levels for seniors on a limited income. We have to come up with a new way to increase monthly income for operations.
I sought advice from the largest institutional investors and financial advisors, professionals with safe track records, records without losses and reasonable returns. We crafted a plan to form a new public/private partnership to be the recipient of the sales proceeds endowment. Earnings on proceeds can create a new income stream to operate the homes. Our plan for the Anchorage home produces new income of $107 million dollars, $75 million from the purchase and another $32 million from investments. The other statewide purchases will be proportional in bringing new income to the operations of each of those homes.
This plan is a new, innovative approach to taking care of our obligations to our growing number of seniors. Seniors are the state's highest growth demographic. The plan brings in more cash income annually than expense. The net result is a reduction in cost to the state while the homes increase their investment in senior care, a great result for both. Our investor group can purchase and finance the homes, and we're capable of covering the down payment requirements.
Senior Alaskans will be the beneficiary. The plan can be in place in a month.
What's your passion or special interest? What services must not be cut? Devising new ways to handle old problems can create new solutions. These problems are opportunities. As Alaskans, we can innovate to make it through our economic trials.
Jim Crawford, a lifelong Alaskan, is an Anchorage real estate broker with a background in finance and mortgage.
The views expressed here are the writer's own and are not necessarily endorsed by Alaska Dispatch News, which welcomes a broad range of viewpoints. To submit a piece for consideration, email commentary(at)alaskadispatch.com.