In the MPLT’s recent board meeting, the board reviewed the draft audit and found the decline in assets was primarily due to the $4.4 million that was due to the CNMI government in 2009.
“Last year, we accrued for that and there was liability in the books,” reported Michael Johnson of Deloitte & Touche on some of the report’s highlights.
From $4.4 million in 2009, the amount due decreased to only $17,000 in 2010.
The payment of the $4.4 million to the CNMI government was listed in the books as a liability in fiscal 2009 that resulted from the interest of the Northern Marianas Housing Corp. loan that was paid for in 2010 according to the auditor.
Based on the MPLT annual report for FY 2009, NMHC defaulted on its loan in 2007 when the P.L. 10-29 and 12-27 was repealed by P.L. 15-48. The report stated that MPLT negotiated a settlement agreement in which $2.025 million was paid and the related loan portfolio transferred to MPLT.
It further stated that MPLT was still managing the loan portfolio and was still attempting to recover $8.9 million principal.
“Due to collection uncertainty, for this investment, a write-down of value amounting to $4,172,000 was recognized by MPLT as of Sept. 30, 200,” the annual report stated adding that interest “is being recognized based on collections.”
Moreover, the draft audit for FY 2010 further explained that assets went down as did the liabilities in FY 2010 — again due to the $4.4 million liability that was paid out.
The draft audit also saw an increase in notes receivables from 2009 to 2010.
The reason again for this increase was the payout the $4 million loan that MPLT gave to the CNMI government in 2010.
Based on the income statement for FY ’10, MPLT’s expenses for last year decreased a little bit from prior year. There were no additional bad debts to record, said Johnson. “That was good.”
Operating revenues decreased from $6.8 million in FY 2009 to $5.5 million in $2010.
Cash flows from operations, the draft audit stated, decreased from $2.6 million. The reason for that is the $4 million payout to the CNMI government.”
Johnson also reported that the draft audit also included $500,000 insurance on investments.
The audit also acknowledged that the MPLT changed its investment policy in Dec. 2010.
“We didn’t see anything that is outside of investment policy,” said Johnson.
He explained to the board that when they looked at the investment statements, the audit performed tests whether these are in compliance with the investment policy.
The review of the draft audit also discussed local loans including $143,000 listed for APLE 501 — parent-student leadership loan program in Rota — which the annual report for 2009 claimed as non-performing investment.
The board also reviewed the loan extended to CUC from $3.5 million in 2008 that went down to $1.8 million in 2009 and went down further to $245K in 2010.
The auditor also reminded the trustees that GASB Standards called for regularly monitoring fixed and capital assets to see if there is impairment.
Chairman Alvaro A. Santos said the agency has a 4,000 sq. m. property on Capital Hill that was last appraised for $273,000.
He said there were intentions years ago to build structure on the property; however, the plans had to be shelved due to “the [bad] economy.”
The auditor said at some point the trustees will have to make a decision on the said property.
Santos explained that there was a freeze in the plan to use the property due to the “economic landscape…that has gotten worse.”
“The plans were held in abeyance. There is nothing much we can do,” he said.
Johnson said there has to be an update to the appraisal every three years.
The trustees agreed that $273,000 could be an overstatement of the value of the property.
Johnson again reminded the trustees and management that they are required to disclose “related party transactions” or loans with banks or any financial institution.
As of Sept. 30, 2010, there was a $114,000 loan by a trustee. There was a $120,000 loan listed for FY ’09.
Statement of revenues and expenses
According to the statement of revenues and expenses for the six months ending March 31, 2011, MPLT’s total operating revenue was $1.56 million (year to date actual) with an FY 2011 budget of $2.8 million.
Its operating expenses for the same period totaled $359,772 with the breakdown as follows: money management fees, $74,400; professional fees, $44,689; salaries and wages, $22,991; personnel benefits, $2,557; contractual expenses, $28,925; portfolio management consultant, $54,380; loan administration fee, $28,773; audit, $8,900; board expenses, $10,435; utilities, $5,358; office expenses, $24,418; money management administration, $43,066; depreciation, $10,879.
Further, the board reported a net income of $1.058 million as of March 31.
MPLT’s assets as of April 27 stood at $75 million for both general and park funds.
