Legislative initiative seeks to amend Article 12

Senate President Jude U. Hofschneider presides over yesterday’s Senate regular session. Also in photo are Senate clerk Doris Bermudes and Senate legal counsel Joe Bermudes.
(FERDIE DE LA TORRE)

Senate President Jude Hofschneider (R-Tinian) introduced yesterday a legislative initiative that will amend Article 12 of the NMI Constitution to remove the restriction on the alienation of land in the Commonwealth.

Aside from Hofschneider’s Senate Legislative Initiative 22-01, 10 other bills and one resolution were filed during the Senate’s third day of its first regular session at the chamber on Capital Hill.

Hofschneider said his legislative initiative will allow Northern Marianas descent landowners to fully exercise their real property rights, and will reduce the NMD percentage of ownership interest in an NMD corporation.

If the initiative receives affirmative votes comprising three-fourths each in the House of Representatives and Senate, it will then be put on the ballot at the next general or special election for voters to either ratify or reject it.

Article 12 of the CNMI Constitution limits land ownership in the CNMI to persons of Northern Marianas descent, or NMD.

Hofschneider stated in the initiative that more than 40 years have passed since the implementation of the Article 12 restriction and it has served its purpose, with most private lands in the CNMI owned by the NMD people of the Commonwealth.

Yet the initial reasons supporting the establishment of Article 12 are no longer consistent with the needs of the Commonwealth and its people, Hofschneider said. It is time for the Commonwealth government to let NMD landowners make the best decisions for themselves regarding their private lands, he added.

He said private landowners of NMI should be allowed the freedom and liberty to exercise their full property rights, which include their right to keep, sell, lease, or transfer their properties in the open market and to those who are not NMD.

This initiative, Hofschneider said, does not prevent NMD landowners from choosing to create covenants to transfer their properties to future heirs nor does it prevent landowners from leasing rather than selling their land fee simple.

He said removing the restrictions on land alienation in the CNMI will provide new and better opportunities for more financial security and liberty for its people and NMD landowners to be able to live their lives in comfort, security, and dignity.

Removing the land alienation restriction will also increase the value of real estate properties, which would increase the access to capital from lenders, home loans, home equity lines of credit, lower interest rates, etc., he added.

He said the CNMI can also establish a real estate market with access to the open market similarly to Guam and other U.S. jurisdictions.

Hofschneider said this may also create a flourishing housing market with access to secondary mortgage markets home loans, home equity lines of credit etc. and encourage more interest and investment from reputable and well-established investors.

He said Article 12 Section 5 of the CNMI Constitution must be amended to encourage more partnership between NMD residents and investors.

Under Article 12 Section 5, a corporation is considered a person of NMD if it is owned 100% by persons of NMD.

Hofschneider said he supports the purpose of this limitation, but the same result can be achieved by providing that a corporation may be considered a person of NMD so long as 51% of its shares or ownership interests are held by persons of NMD.

Under Hofschneider’s proposed initiative, the acquisition of permanent and long-term interest in real property within the CNMI shall not be restricted to persons of NMD. He said any person may acquire a permanent and long-term interest in real property within the Commonwealth.

Under the initiative, a corporation shall be considered to be a person of NMD so long as it is incorporated in the Commonwealth, has its principal place of business in the Commonwealth, whose directors are at least 51% persons of NMD and has voting shares 100% of which are actually owned by persons of NMD.

“…The amended provisions of this legislative initiative shall apply to new real property transactions after the ratification of this legislative initiative,” he said in the initiative.

He said the amendment to remove any restriction on land alienation in the Commonwealth does not automatically extend the terms of existing private real property leases; however, existing private real property leases may be extended to change or extend the lease terms subject to negotiated new terms and consideration.

There have been numerous attempts over the years to amend or repeal this land restriction.