LOFT suggests Commissioners of the Land Office refocus their investments

OKLAHOMA CITY (KFOR) – A new report from the Legislative Office of Fiscal Transparency (LOFT) recommends the Commissioners of the Land Office divest their holdings in “surface land” real estate to focus on their more profitable securities holdings.

The CLO is the second largest land owner in the state, trailing the Oklahoma Department of Wildlife Conservation.

The agency’s three main asset classes include, surface acres (real estate), mineral (sub-surface) acres, and securities (stock, bonds, etc.).

After analyzing their holdings and returns, LOFT suggested that the CLO divest its “surface land investments as leases expire and convert the value of the holding to interest-bearing investments.”

Reorganizing the agency’s investment priorities has two major benefits, according to LOFT:

  1. It would free up real estate for local economies
  2. More money would flow to schools statewide by higher investments in stocks and bonds

When the CLO buys property, they are exempt from property taxes.

Senator Julia Kirt, D-OKC, said cities miss out on millions of tax dollars, while leasing revenues go to schools across the state.

“The western agricultural lands, that money goes to every single school, so it might not be benefiting those students there,” said Kirt.  

The LOFT report showed Cimarron County being an area that is impacted by the CLO’s large real estate holding.

“CLO owns approximately one-fifth of all agricultural land in Cimarron County, actively leasing 234,780 acres of agricultural land,” read the report.

Leasing revenue from that land is collected by the CLO and distributed to schools statewide.

But the loss of tax revenue means schools in Cimarron County miss out on $1.56 million, according to the report.

It isn’t just rural Oklahoma that would benefit from a new strategy.

“I’m real concerned about commercial real estate and whether the state is intervening in a market that may not be healthy locally,” said Kirt.

As of June 2022, CLO’s commercial holdings totaled $151,781,500.

Around $123,760,000 of that total is held in Oklahoma City.

The suggestion by LOFT would shift that estimated value to CLO’s securities portfolio, which makes a return of about 5.15%.

LOFT projected changing investment priorities would increase the total amount of distributions from $122.5 million to $174.5 million.

“As I went through the LOFT report, that’s probably the number one thing I picked up on…you’re looking at a difference of almost $50 million a year,” said Sen. Roger Thompson, R-Okemah.

Thompson is the LOFT Oversight Committee Co-Chairman.

He agreed with the idea of improving ad-valorem bases across the state, but he does warn of selling real estate assets too quickly.

“You don’t need to dump all of this at one time. That’s going to hurt the value of it. I think we need to be strategic when we look at it,” said Thompson.