AGO: Initiative will turn DOL into ‘piggy bank’ for govt debt

The Office of the Attorney General has opposed an initiative that will allow government to pay its debts using funds generated through leasing public lands.

Attorney General Matthew Gregory said the proposal would restrain the Department of Public Lands from dealing with potential developers, and from availing of federal aid for homesteads.

By allowing the Legislature to dip into funds that were previously off-limits, the initiative would turn the Department of Public Lands into a “piggy bank” for public debt, Gregory said.

Under the initiative proposed by Rep. Heinz Hofschneider, DPL will not be able to sell any land even to qualified buyers. The initiative will prohibit DPL from leasing out a property for less than 5 percent of its appraised value.

The initiative will also allow the Legislature to take at least $2 million a year from DPL in order to retire debt. This comes in line with the proponent’s stated intention of borrowing money for the repair of the Commonwealth Utilities Corp.

According to Gregory, the initiative would hamper DPL’s efforts to use funds from the Internal Revenue Service to build new homesteads. To be eligible for the funds, DPL needs to sell the land to the developer.

He added that since only people of Northern Marianas descent are allowed to hold fee simple interests, the loss of such federal aid would deprive a locally owned business the opportunity to work on a large-scale construction.

Gregory argued that the proposed minimum rental for public lands may work to DPL’s disadvantage.

“Limiting the department to only accepting rent in terms of 5 percent of the appraised value of the land limits the ability of the department to strike a deal on other grounds—such as a percentage of gross revenue,” he explained.

Further, Gregory said that the provision allowing the CNMI government to use DPL funds to pay debt service will push the department to bankruptcy

“Taking [at least] two million dollars a year from DPL in an effort to retire debt is a recipe for disaster if there is no guarantee that debts will not just continue to [mount]. Moreover, as the revenues of the department shrink under the burdens of the [initiative], there is no guarantee that there will be any money for the Legislature to take,” he said.