In a letter to House Minority Leader Joseph P. Deleon Guerrero, R-Saipan, Chamber president Doug Brennan said the business group appreciates the opportunity to present testimony on House Local Initiative 17-7, which will allow the people of the NMI to vote on whether to continue or repeal Article XII, which allows only people of Northern Marianas descent to own land in the commonwealth.
Deleon Guerrero is the author of H.L.I. 17-7.
Brennan said once Article XII is repealed, investment in commercial, business and residential areas will be instantaneous.
“We could witness development, construction starts and a revitalization of the CNMI through money circulation and a renewed interest in the CNMI for investment purposes,” Brennan said.
He said banks will begin to talk to hotel owners if those long term leases are converted to fee simple.
“The CNMI government would, in the end, be the beneficiary as development would re-occur and there would be in turn greater funding for use on public land for homestead property development,” Brennan said.
He added that the chamber cannot identify any other single available “economic catapult” that would have the effect the repeal of Article XII would have.
“This is one economic tool that is totally within the grasp of the CNMI citizens. Unlike recent economic events as a result of unintended consequences of federal legislative initiatives, this economic event, as it should be, is totally in the hands of local authorities,” Brennan said.
He said currently under Article XII, there is economic uncertainty, with banks unwilling to offer loans on current investments, as original long term leases are nearing expiration, thereby stifling growth by those that have already invested in the CNMI.
“Potential investment is stifled as new investors watch what is transpiring with those already under restrictive land ownership conditions,” Brennan said.
“Mortgage portfolios are not strong. If a bank takes ownership of land through a loan default there is essentially no market for resale of that land. The small pool of those that could financially and legally purchase fee simple on those delinquent loans is growing ever smaller,” Brennan said.
He said currently, the rights of redemption by those who defaulted on a loan are a 12-month period and this makes selling of property by a bank impractical.
“Banks are withdrawing mortgage products as a result of an inequitable market, which will not change until land is able to be offered under better market conditions,” he added.
Brennan said individuals who own property and/or the home or buildings on that property cannot mortgage the property or secure bank loans based on the value of the assets.
“CNMI real estate portfolios reflect the quickest de-escalation in value in any U.S. jurisdiction. his is the effect of Article XII,” Brennan said.
He said the chamber found merit in all the arguments “where the repeal of Article XII either eliminates the impracticability of those concerns, or allows for a progressive change in the CNMI’s culture and the current economic situation calls for an even greater need to eliminate, through repeal, Article XII of the CNMI Constitution.”
He added that the chamber further believes land issues will always be an emotional issue.
Brennan said with the repeal of Article XII, there needs to be a provision that will not, or should not, affect those transaction made 20 years ago where the possible repeal of Article XII would void those transactions as drafted into those lease agreements.
“The repeal of Article XII should only affect transactions made after the date of enactment of the repeal of Article XII,” he said.
A recent survey conducted by the chamber among its membership showed that 75 percent of those who participated were in favor of repealing Article XII.
Brennan said the repeal of Article XII will not force individuals to sell their property.
“It will increase the value of their property and allow them treat their property as a liquid asset,” he added.
Brennan said that either way, the chamber believes the citizens of the CNMI are entitled to a vote on this important issue.
