The Mental Health Trust would give up $3.2M in rent to house a nonprofit serving its beneficiaries

The Alaska Mental Health Trust would forgo at least $3.2 million in rent over ten years under a proposal to lease an Anchorage building to a nonprofit for about one percent of its market rate. The tension in the deal is that the Trust is legally required to squeeze revenue from its land, but the nonprofit exists to serve Trust beneficiaries, the same people that land revenue is meant to help.

The Trust's Resource Management Committee is recommending a 10-year lease to Volunteers of America Alaska at a starting rent of about $3,300 a year, against a fair market rent the notice puts at roughly $327,000. Over the full term, the notice estimates the Trust would give up a minimum of $3.2 million in rent it could otherwise collect.

The committee's case is that this is exactly what the Trust's land is for. By its own account, Volunteers of America Alaska serves entirely Trust beneficiaries, 600 people with mental illness and substance use disorders plus 1,800 family members, and the organization has already rented in the building at full market rate for seven years. The below-market lease would let it expand.

The counterweight is the Trust's own mandate. The Trust Land Office, which manages roughly a million acres, is required by law to maximize revenue from Trust land, and that revenue flows into the fund whose earnings pay for beneficiary programs statewide. Every dollar of rent forgone here is a dollar that does not reach the fund.

That is the trade at the center of the decision, and the Trust has made this call before, approving similar below-market leases in April to Assets Inc. and Catholic Social Services, nonprofits that also serve beneficiaries. In a letter requesting the rate, VOA Alaska president and chief executive Julia Luey called the property "the organization's operational homebase."