DEPARTMENT of Public Lands Secretary Teresita Santos has submitted a response to the complaint filed against DPL by the Marianas Public Land Trust.
In a letter to the Office of the Public Auditor and the Office of the Attorney General dated Jan. 9, 2024, Santos addresses each of the issues that MPLT raises in its complaint.
She said DPL does not owe MPLT any remittances for fiscal years 2021 and 2022 because her department did not generate enough revenue to be legally mandated to make remittances.
Santos said DPL experienced revenue reductions associated with the Covid-19 pandemic; a reduction in Business Gross Revenue collected from public land lessees; and increased expenses tied to maintaining “public lands not under lease, such as Managaha and [the former] Mariana Resort.”
As for DPL’s alleged failure to remit $1 million in settlement funds from its case against Mariana Resort & Spa, Santos said MPLT is not entitled to the entire sum of money.
She said MPLT’s interpretation that the funds are “supplemental or excess” is “premature.”
The settlement funds are “derived from the management and disposition of public lands” and therefore qualify as DPL revenue, she added.
In addition, the Mariana Resort settlement fund revenue is recorded for fiscal year 2024, and so expenditures — such as remittances to MPLT — can’t be tied to these funds yet because the DPL budget was set last year, Santos said.
But she said a supplemental budget that the department has created set aside an estimated $300,000 that will be remitted to MPLT.
However, she said the actual remittance amount “must be determined after the end of fiscal year 2024” pursuant to the cost of DPL’s “reasonably necessary expenses.”
Regarding the $2.5 million that MPLT said was taken from DPL during the Fitial administration in 2010, Santos said the amount was transferred “pursuant to the Declaration of a State of Emergency” signed by the then-governor.
Santos said she “does not have information regarding any efforts taken to secure the return of those funds to DPL.”
She also said that any funds recovered by DPL from the general fund would be counted as department revenue and would be “subject to expenditure by DPL for its reasonably necessary costs of administration.”
Santos makes the same argument regarding MPLT’s claim that DPL failed to remit $1.977 million in land compensation as indicated in a 2012 audit. She said if recovered, these funds would be classified as the “reasonably necessary” cost of DPL’s administration.
She said DPL does not object to MPLT requesting a “direct appropriation from the general fund” for either the $2.5 million or the $1.977 million.
According to Santos, DPL has “several bank accounts into which revenues from the management of public lands are deposited.”
These accounts include a savings account, “several investment accounts,” and an account “in which DPL maintains lessee security deposits,” she added.
For some of the accounts, she said DPL is unable to determine when they were they established, adding that some predate Public Law 15-2, which established the DPL operations fund in 2006.
Santos said the DPL operations fund is supposed to be maintained by the Department of Finance, and is where “all revenues received by DPL are to be deposited.”
However, she said despite being established in 2006, the DPL operations fund was “only recently created” by Finance.
The “transfer of all funds currently held by DPL (with the exception of lessee security deposits) is expected to be completed within the week,” Santos said.
She said she will continue to submit DPL’s annual budget to the Legislature “for information purposes only,” citing Article XI of the Constitution and P.L. 15-2.
“DPL notes that the Legislature has not questioned this practice in reviewing its annual budget submissions. To the extent that P.L. 15-2 is held to be unconstitutional by the Commonwealth court or is amended by the Legislature, DPL will of course comply with applicable law,” Santos said.
MPLT is a constitutional trust whose primary purpose is to manage the net revenues from the leasing of CNMI public lands. DPL, for its part, is responsible for the management of CNMI public lands.
