OPINION | No to DPL’s proposed amendments to reduce public land lease base rent rate

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HAFA Adai Department of Public Lands Secretary Marianne R. Concepcion-Teregeyo!

This letter is submitted on behalf of Matua Council for Chamorro Advancement to inform your office that we OPPOSE the proposed amendment under 1 CMC §2801 et. seq., §145-70-110, Section (e)(8) to reduce the base rental rates on new lease based on the value of fee simple including improvements (if any) from 5 percent of Fair Market Value to 3 percent of Fair Market Value. This calculation will be used as basis for rent calculations for matured leases that will be given another 15 years lease term.

As we are all aware that at least two major hotels on public lands whose 40-years lease term are set to expire within the next 24 months, and are located along the northwest coastline of Anaguan Bay — Fiesta Resort and Hyatt Regency Hotel on the island of Saipan.

As we are also aware that Public Law 20-84 was passed to address these land leases that are soon to expire or matured 40-years leases on public lands such as Fiesta Resort and Hyatt Regency Hotel. Unfortunately, P.L. 20-84 was passed after Mariana Resort’s 40-years public land lease matured or expired. Hence, it failed to benefit from this 15-year lease extension or new 15-year lease agreement.

It is a fact that it is the Department of Public Land’s inherent authority to adopt rules and regulations in support of their duties and responsibilities pursuant to Article Xl of the Commonwealth Constitution a and 1 CMC §2801 et. seq.

It is also a fact that P.L. 20-84 provided flexibility for the DPL Secretary to negotiate lease terms and conditions. But the strict fiduciary care provided for in the Covenant with the United States of America, CNMI Constitution Article X1, and P.L. 15-2 takes precedence.

However, DPL’s statement in its Executive Summary stated in part that they conduct an internal feasibility study and market analysis to determine the sustainable lease rents DPL may charge clients leasing public lands in the Commonwealth of the Northern Mariana Islands.

That said DPL should make available through publication the feasibility study stated in their Executive Summary of this APA in support of this proposed amendment to show the beneficiaries and the public its position in establishing the base rental fee for both Fiesta Resort and Hyatt Regency.

This proposed amendment will include other public land leases that are also nearing their 40 years lease maturity dates such as Pacific Islands Club, Coral Ocean Point Golf Resort, Grace Christian Academy School and Church, Kanoa Resort and Saipan Palau Evangelical Church.

DPL’s use of the result of the feasibility study and market analysis are irrelevant to form the basis for determining rents to provide the maximum benefits to it beneficiaries, as Co-Trustee of Public Lands, while providing fair leverage and sustainable negotiation to all public land lessees.

It is inappropriate for DPL to use these economic indicators to assess the base rent for these lands because these lands leases are not government land, it is trust land transferred to the CNMI government from the United States of America government, under the auspices of the United Nations after world war two, after taking control from colonial taking of Chamorro lands by the Spain’s colonial government, Germany’s colonial government, and Japan’s Imperial government.

We should never forget and give sympathetic consideration of the history of the Chamorros and their cultural and historical heritage in the last 3,500 years, including the 400 plus years of colonial dispossession of their ancestral, indigenous and aboriginal lands when making decisions on these land leases.

Again, both the feasibility study and market analysis, including prior base rent and BGR lease payments in the last 40 years, should be made available to the beneficiaries and the public to ensure transparency and accountability in the management and disposition of our assets and resources by DPL as Co-Trustee.

It is suspicious and premature to make effective this 30 days-notice Rule Amendment to reduce the DPL base rental from 5 percent FMV to up to 3 percent FMV that affects the rent calculations and impacts lease payments on new15 years lease term without first providing the beneficiaries the historical information or data on rental and BGR lease payments assessed on these hotel 40 years, the feasibility study and market analysis.

Further, why are these trust land being treated and appraised as “fee simple” land when they are not? And why is the CNMI government allowing DPL to lease our trust land at 5 percent of FMV and appraised as fee simple land?

In fact, the “possible terms and conditions” enumerated in P.L. 20-84 on lease terms and conditions that DPL may impose are for public benefits and contributions in creation of public improvements such as public facilities, establishment of in-house job training programs, financial contribution to an independent job training program or scholarship fund to list a few, are not intended exclusive for the beneficiaries of these trust lands. But are intended in P.L. 20-84 for the benefit of all CNMI residents.

Furthermore, DPL should not be allowed to lease two major hotels to one investor because if the investor failed, then, two major hotels, like Fiesta Resort and Kanoa Resort will be compromised. We must learn from the Mariana Resort experience.

It is critically important that trust lands should be leased at the highest possible rate, which means that it should not be less, for example, than 90 percent of its appraised value. The Business Gross Revenue or BGR should be used by DPL and investors as leverage in determining the land lease terms because economic conditions fluctuate.

And more importantly, as Co-Trustees of public lands, it is your responsibility to uphold the strict fiduciary duty to ensure the greatest benefit and protection of assets belonging to the beneficiaries of these public lands.

Equally important, we also question what is the position of the other Co-Trustee, the Marianas Public Land Trust, on these important issues and public policy that DPL is proposing to amend?

Again, Matua Council hereby OPPOSE the adoption of the proposed amendments to 1 CMC §2801 et.seq., §145-70-110, (e)(8) – To reduce public land lease base rent rate from 5 percent FMV to up to 3 percent of FMV. This public policy is not in the best interest and benefit of both DPL and MPLT’s intended beneficiaries.

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