CNMI Casino Bill Would Help Pay Land Compensation

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After Fund paid up, extra revenue could go to landowners

By Alexie Villegas Zotomayor

SAIPAN, CNMI (Marianas Variety, July 17, 2013) – With about $100 million needed to compensate the land claims of over 300 land owners in the Northern Marianas, the Saipan casino bill, if it becomes law, will use a portion of the revenue to pay those claims.

In an interview on Monday, Gov. Eloy S. Inos said, "We have to find money for them," referring to the affected land owners.

He also said that he has some ideas on how to address this issue.

Currently, the Saipan casino bill, or House Bill 18-45, House Draft 7, contains a provision on the disposition of the revenues, which includes taking care of still unpaid land claims.

Inos said that in the casino bill, there is a provision that allocates 80 percent to the Retirement Fund.

"Once the Retirement Fund is essentially funded, any additional revenue from casino gaming will go to deficit reduction which includes land claims compensation," said Inos.

The Department of Public Lands through Deputy Secretary Pete I. Itibus, said they have yet to resolve this issue of land compensation and the agency may need $100 million to pay land owners.

Its Bank of Guam land compensation account has only $100 left.

There are over 300 landowners claiming compensation and their claims earn interest at 3 percent compounded interest.

Inos is looking at casino and video lottery gaming, among other potential sources of revenue to address the CNMI’s financial problems.

He said there is a specific provision in the bill to allow for land compensation.

Based on a bill that still awaits Senate approval, gaming machine jackpot taxes and penalties will be allocated to the Retirement Fund, 80 percent; Rota projects, 5 percent; Tinian projects, 5 percent; and Saipan projects, 10 percent.

Casino gaming taxes and penalties, like the gaming machine jackpot taxes, will be "deemed general revenues" and shall be deposited into the CNMI Treasury in a separate account" and will be allocated to the same intended recipients in the same allocation.

Other revenues will also be apportioned to the same recipients.

Once the casino revenues have taken care of the Fund, the bill proposes to allocate 50 percent to deficit reduction thereafter.

Opponents of the bill point out that it is mathematically impossible that Saipan casinos could generate the hundreds of millions of dollars in additional revenue that the CNMI government needs.

The CNMI government back in 2003 issued Land Compensation/Prison bonds in the sum amount of $40 million on Dec. 11, 2003. These bonds remain outstanding until the CNMI issued Series 2007B general obligation refunding bonds.

Of the $40 million in bonds issued, $28 million went to land compensation while $11 million for the construction of the 324-bed corrections facility.

The CNMI government, however, is not currently looking at issuing bonds for land claims as it is considering to float up to $300 million in pension obligation bonds (POB) to plug the CNMI’s gaping pension hole.

Coupled with POBs, the CNMI is hoping that revenues will be obtained from operating a casino on Saipan.

In a separate interview, Rep. Mariano I. Taitano, IR-Saipan, one of the 13 lawmakers who voted for the passage of the bill, is confident the Senate will approve the casino measure.

"I am optimistic that the Senate will pass it, depending on the responses received from the public. The committees responsible for the bill will now conduct public hearings on Rota, Tinian and Saipan and hopefully retirees will come out and support it," he said.

Taitano believes there is strong support for this measure now given that "the government does not have the financial resources to keep up with the payments it owes the [retirement] program."

"The Fund and actuary have come out publicly saying that the program will run out of money on March 1, 2014, and I can’t imagine the chaos this will cause," said Taitano adding that as a retiree he fully supports the bill’s enactment into law.

He said he believes the casino will help solve some of the CNMI’s financial problems.

As to the video lottery gaming proposed by the administration, Taitano said it has been a commonwealth statute since the Third CNMI Legislature.

"I don’t see why it shouldn’t be implemented. Yes, I am in favor of it and it will further improve our (CNMI’s) rating in floating the POB, which the people voted in favor of doing in last November’s election," said Taitano.

He recognized that the administration and the Legislature are pursuing this option to revive the economy.

"It isn’t enough for the commonwealth to rely only on the tourism industry," he said.

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