MPLT portfolio valued at $71M

 Marianas Public Land Trust, the autonomous agency created to hold and invest money from public land leases, is still recovering from the impact of the global financial crisis in 2008, according to MPLT board chair Alvaro Santos.

Speaking at the Rotary Club of Saipan general membership meeting yesterday, Santos said MPLT has a portfolio of $71 million as of Sept. 30, 2011, but noted that it incurred a “dramatic loss” of $7 million three years ago due to the crisis.

Santos said they shifted much of their portfolio into fixed income given the market situation at that time, allocating 65 percent to fixed income and 35 percent in equities.

“That sort of protected us from larger losses in the financial market,” explained Santos. “But after that, we bounced back. So for this year, our total portfolio is recovering. We have $71 million and still recovering.”

MPLT has one investment consultant, Morgan Stanley Smith Barney, and seven money managers that manage its portfolio.

Santos described their investment strategy as “conservative in general.” “We try to stay on the safe side and ensure that we meet our obligation with the central government,” he said.

MPLT is mandated by law to remit to the CNMI government’s general fund the interest income it receives from investing the public land lease money.

“Any and all interest income dividends earned, less administrative expense for the agency, go to the general fund. That had been going on since 1983,” said Santos.

He said they have remitted a total of $55 million in interest earned income since the inception of MPLT.

“That’s quite a bit of money,” said Santos, who added that for this year, they had a return of 5.9 percent and gave the central government a $2-million check.

Santos noted, however, that MPLT does not have the authority to earmark that money. “Our responsibility stops when we cut a check to the central government and it’s up to the Legislature with their appropriation authority to allocate those funds to the competing needs of Commonwealth residents,” he added.

MPLT vs other land trust agencies

Unlike MPLT, Santos said he was “surprised” to find out that the land trust office of Guam does not invest the public land lease money it receives.

“They just let the public lease portions of public land that almost no revenue-generating activity takes place. That’s it. There ‘s no investment activity,” he said.

Santos said any public land lease money in Guam also “goes directly” to its central government.

“But other jurisdictions [in the Pacific], they have similar functions like us,” said Santos.

‘Challenging’

One of the “most challenging” difficulties that MPLT encountered over the years, Santos said, was “trying to get the public land lease money” from the Department of Public Lands.

“It took two lawsuits before the Superior Court to force public lands lease monies to come to the Land Trust from the Marianas Public Land Corp. and its subsequent successor, [Marianas Public Lands Authority],” he said.

When he came on board in 2006, Santos found out that over $400,000 in legal fees were incurred in those lawsuits. “I thought that would not have been necessary if there was a more cooperative relationship with [DPL] and [MPLT],” he said.

Santos said he worked with former Public Lands secretary John Del Rosario Jr. “to avoid the mistakes of the past,” allowing MPLT to receive from DPL $5 million in 2007 and 2008.

The board chair added that they are expecting to receive money from DPL “anytime now” or as soon as they close their books and have audited financial statements available.

Diversified local
investment

Prompted by the urgency for more revenue for the government, Santos said they have developed a new investment program focusing on the local market.

The diversified local investment, Santos said, allows them to either give loans or invest at the local level “so we can help the economy in one way or another.”

At present, MPLT is looking at three proposals. The first is the $13 million ARRA money application for the Small Business Credit Initiative of the Commonwealth Development Authority that would involve MPLT through a “$10 million standby line of credit.” The second is the $2 million electronic health record system for the Commonwealth Health Center that aims to “cut down paperwork and a lot of bureaucracies.” The third is the financing for the Arctic Circle company for the creation of cargo transportation service between the CNMI and Guam.

While they would like to help local investments, Santos said they are also “interested in those endeavors that will bring in and infuse new money into the economy.”