CNMI Public Lands Department Supports 99 Year Leases

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Extension from current 25-40 years good for investors

By Junhan B. Todeno

SAIPAN, CNMI (Marianas Variety, June 3, 2013) – The Department of Public Lands is in favor of House Legislative Initiative 18-5 which will increase the maximum term of public land leases to 99 years.

The proposed constitutional amendment will give investors more security and a sense of stability in their investments, according to DPL acting Secretary Pete A. Tenorio.

The comments of Tenorio were read by Ramon S. Dela Cruz of DPL during the recent public hearing conducted by the House committee on Natural Resources led by its chairman Rep. Anthony Benavente.

At present, the term of public land leases for more than five hectares is 25 years, with an additional 15 years subject to the Legislature’s approval.

Tenorio said extending the lease terms on public land to 99 years will allow legitimate investors to bring in more money to the CNMI.

"Having a 40-year lease term is not a significant amount of time to develop an investment plan," he said.

On the other hand, he added that 99-year lease terms will be more practical for investors, which will lead to greater development and economic growth in the CNMI.

"Greater development and economic growth will be beneficial for all CNMI residents, as it will allow for more jobs and more local revenue," he said.

Tenorio said the extension of leases will boost the economic development of the CNMI by allowing investors more time to earn a return on their investments.

The present 25-year lease term plus a 15 year extension makes it difficult to attract potential investors, but H.L.I. 18-5 will solve that problem, he said.

A legislative initiative must be passed by the three-fourths of the members of each house present and voting. It doesn’t need the governor’s approval but it must be ratified by voters.

Tenorio noted the land lease policy of the Republic of Palau, saying that since 2007, its government increased its previous limited 50-year leases on public land and now leases its public lands to foreign individuals or businesses for up to 50 years with renewal terms of up to an additional 49 years for a maximum total of 99 years.

He also mentioned the Federated States of Micronesia which presently allows lease terms such as the Kosrae law that provides for a 55-year lease renewable for an additional 55 years; in Chuuk for up to 99 years; Pohnpei for 55 years renewable up to 99 years; Yap no more than 100 years, and the FSM national government itself, up to 99 years.

In the CNMI, Tenorio said several businesses that are leasing public lands are nearing the end of their 40-year maximum lease term.

Among them are Hyatt Regency Saipan, Fiesta Resort & Spa and Kanoa Resort.

He said extending the term of public land leases to 99 years will generate renewed development interest in the commonwealth among investors.

"It will also enable the government to have a much longer-term reliance on the income generated from large land leases or prime land leases such as hotels," he said.

He said longer leasehold term will encourage lending by investment and financial institutions to finance major projects that will then create jobs and stimulate other economic activity.

"DPL fully supports H.L.I, 18-05 so long as there is absolute assurance that there will be no eventual freehold transfer at a later date, vis-à-vis, a change in the law," he said.

He urged the House and Senate to pass H.L.I. 18-5 so that it will be placed on the ballot for voters’ ratification in the 2014 general elections.

But Ramon B. Camacho, chairman of the Saipan and Northern Islands Municipal Council, expressed strong opposition to the extension of land leases.

"This will deter investors from investing in private land and opt for government lands instead, thereby increasing the probability of corruption in public office," he added.

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