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Oklahoma Land Agency commissioners were asked Tuesday by lawmakers about the agency’s investment last summer in a local real estate company that has rent-to-buy plans for people struggling to qualify. announced that it had made the requested changes. Housing loan.
Agency officials spoke to The Oklahoman after presenting the budget before its annual session to members of the state House Education Subcommittee on Appropriations and Budget. They said the investment in Berryrock Homes had been successful, but as a result of the concerns expressed, the authority had changed the way it treated direct investment.
The Commissioner of Lands manages state school lands and is responsible for managing the assets for the benefit of public education in Oklahoma. The purpose of this agency is to obtain maximum benefit from the use of state school lands to support education funding. The Commissioner of Lands owns and manages approximately 726,000 acres of surface land and approximately 1.2 million acres of mineral land.
The Commissioner of Lands also administers nine state trusts and helps fund 507 school districts and 13 universities. During fiscal year 2023, the agency distributed $129.4 million to various educational organizations.
Berry Rock Homes was less than a year old when the Oklahoma Land Commissioner invested in it.
The agency originally invested $8 million in Berryrock Homes in December 2021. At that point, the company was less than a year old, and Mike Jackson, executive director of the Legislative Office of Fiscal Transparency (LOFT), last spoke to Oklahoma Watch. That summer, state law required companies to be at least a year old before making investments.
There is no doubt about the success of this investment. The agency’s assistant secretary, John Fisher, said Tuesday that the return on investment is 11%. But a report produced by LOFT last year called into question the Lands Commissioner’s wisdom in making direct investments like the one the agency made in Berry Rock. One of the report’s recommendations was that Congress should “prohibit CLOs from investing directly in private companies.”
Fisher acknowledged that the agency probably moved too quickly with the investment, but said the agency’s intentions were good. He said CLOs are now “not looking at them as a one-time investment, but as an investment class in the same way that other institutional investors treat their investments.”
“We are always looking to increase trust and increase profits,” he said. “Private equity investing is a very good opportunity to grow your investment. We ran instead of walking. We paused because there’s a better way. We’re making an 11 percent return. But we listened to Congress, we listened to our leaders, we said, ‘They don’t agree with what we’ve done, they agree with how we get there. I haven’t.” That’s why we take a step back, learn from people’s opinions, and think, “Could we have done it smarter?” ”
How much did the state benefit from its investment in Berry Rock?
Berryrock investments have brought in $1,127,726 to date, including $220,000 in the third quarter of 2023, said Tristan Newbold, the agency’s legislative director. Bureau of Land Commissioner Dan Whitmarsh did not take questions about the investment from lawmakers during Tuesday’s budget hearing.
The Commissioner of Lands received $8.7 million in state spending in fiscal year 2020, which decreased to $6.7 million in the past two fiscal years. For fiscal year 2025, Whitmarsh said, the agency is requesting about $7.5 million to add a chief internal auditor position (costing about $127,500), and for fiscal year 2019 and 2021. He said he expects to reallocate about $613,000 in overdue budget cash that was reappropriated from the fiscal year.
The value of the land department commissioner’s investment portfolio increased from $2.28 billion in 2020 to $2.63 billion in 2021, an increase of nearly 18%, according to state records.
“We want to make sure we’re not asking for a certain amount of money just for the sake of asking,” Whitmarsh said. “We want to use that money wisely. Whether it’s $6.7 million, $8.4 million, $5 or $12 million, we want to spend it wisely. We just want to make sure it’s the right amount to serve. … It’s not just a matter of numbers, it’s whether that number will help us accomplish what we need for the agency. ”
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