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In-state investment program for North Dakota Legacy Fund likely won't kick off until next year

Supporters of in-state investment, including lawmakers, bankers and economic development agencies, have expressed frustration that the 7% of the oil tax savings account earmarked for investment in North Dakota companies hasn't yet been put to use.

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The North Dakota State Capitol is seen Jan. 17, 2021. Michelle Griffith / The Forum

BISMARCK — North Dakota companies eager to attract capital investment from the state's oil tax savings account will likely have to sit tight until next year.

Popular legislation passed earlier this year sets up an objective for the State Investment Board to invest up to 10% of the $8.4 billion Legacy Fund in stocks and other equity in North Dakota-based companies.

About 3% of the fund is earmarked for emerging local firms. That program, managed by Chicago-based 50 South Capital, announced its first investment earlier this week in Lewis & Clark AgriFood, a St. Louis investment firm that "has a track record of investing in the state," according to a news release.

But supporters of in-state investment, including lawmakers, bankers and economic development agencies, have expressed frustration that the remaining 7% of the fund meant for North Dakota companies hasn't been put to use more than six months after the legislation passed.

The seven-member investment board, chaired by Bowman Republican Rep. Keith Kempenich, discussed in vague terms how the in-state investment program could look during a meeting on Thursday, Oct. 28, but took no official action on the matter.

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The panel voted to commission a financial study of the Legacy Fund that will likely be published in early spring, said Janilyn Murtha, the interim executive director of the Retirement and Investment Office.

Asked about when the program might be up and running, Murtha said that date "is too far in the future for me to talk about today," noting her understaffed agency is hoping to add employees who can help the board create investment guidelines and hire a North Dakota-based money manager for the program next year.

Murtha said forming the program's parameters the right way requires time and patience, though several board members acknowledged the political pressure behind booting off in-state investments.

Bismarck GOP Rep. Mike Nathe, who sponsored the legislation to establish the program, filed a bill draft to bypass Kempenich's board that he hopes will be on the table during the upcoming November special session.

The bill, obtained by Forum News Service through a records request, would establish an "in-state impact investment committee" comprised of the governor, treasurer and insurance commissioner or their chosen delegates to create guidelines for making in-state investments using the Legacy Fund.

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Rep. Mike Nathe, R-Bismarck, at the North Dakota Capitol on March 19, 2021. Jeremy Turley / Forum News Service

The committee would also set up advisory panels of industry representatives and financial professionals to review and make recommendations on investment proposals before they go to the State Investment Board.

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Nathe said no lawmakers should be involved in making the investment decisions since they tend to focus on bettering their own districts.

Board member Sen. Jerry Klein, R-Fessenden, defended his panel's commitment to due diligence and said if another committee were formed, it would face the same hurdles and wouldn't be able to move any faster.

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