Recommendation 1: Development and Maintenance of CNMI Parks and Tourist Sites
Request to foster Public Private Partnerships in the development and maintenance of CNMI parks and tourist sites
The Council of Economic Advisers sees this period of constricted tourism arrivals as an opportunity to reimagine the tourism product the CNMI offers to the world and build synergies between public and private stakeholders of our parks and tourism sites that offers government resources greater efficiencies. This conversation is especially pertinent as government resources are presently burdened by the ongoing response to the COVID-19 pandemic and diminished revenues.
One key collaborative tool used in governments and states across the world is the Public Private Partnership (PPP) model. According to the World Bank’s PPP Knowledge Lab, PPPs have offered a powerful policy tool for improving the economic sustainability of parks and enhancing the quality of services. While many forms of PPPs exist, in jurisdictions around the world, the CNMI has yet to fully capture the economic potential and efficiencies possible through formal collaboration with the private sector.
To foster the development of PPPs within the CNMI’s tourism products and to greater facilitate tourism destination enhancement and maintenance, the Council of Economic Advisers wishes to propose the following:
1. Establish an official Public Private Partnership policy through Executive Directive that permits agencies of the government to develop plans, Memorandum of Understanding (MOU), and processes for partnering with private sector partners in the administration of their public services.
2. Allow for the creation of a Parks and Tourism Related PPP Advisory Committee, comprised of the Marianas Visitors Authority, Division of Parks and Recreation, and the Department of Public Lands, along with the Council of Economic Advisers, to plan for the adoption, resource sharing and partnership necessary to see enhancements to our island’s tourism products.
3. Permit the establishment of private sector adopted tourism sites, under the terms provided by an MOU with relevant agencies to transfer one or more functions of government management of parks and tourism sites to the private sector with clear delineations of the responsibilities of each party to the MOU.
4. Utilize the established Advisory Committee, to work toward the creation of concessionaire arrangements with private operators for tourism sites that have the potential to generate financial returns that can be reinvested in the development, upkeep and maintenance of sites. This model is ubiquitous across the world and is heavily utilized in world class tourism destinations as a method to appropriately target incentives and garner most efficiencies and returns for public parks and tourism sites.
A PPP in this context would potentially allow for necessary capital investments to the CNMI’s parks and tourism sites, such as lighting, restroom facilities, pathway development, and other amenities that increase the value of the site for potential visitors and residents alike. In partnering with the private sector toward allocating the resources for the development of these products, the government may take on targeted responsibilities for simple maintenance and upkeep
Similarly, concessionaire agreements can be placed on sites with significant tourist traffic, such as, the Grotto, Banzai Cliff, and Bird Island, where the market potential for significant returns can be increased if incentives can be placed toward the continued upkeep and further development of the site’s amenities and attractions.
The Council of Economic Advisers notes the important issues that need to be addressed in the development of PPPs for the CNMI’s parks and tourism sites. We submit that PPP arrangements should adhere to a set of principles to safeguard these precious resources of our community. These principles are: (i) Parks and Tourism sites should be operated with recognition of the need for community inclusion that provide both access to these sites by residents, as well as, opportunities for them to access employment and economic opportunity; (ii) Interests must be balanced to ensure environmental sustainability is compatible with the use and development of these sites; and (iii) concessionaire agreements and financial interests within these public sites be transparent to the public to ensure the government maintains the most efficient use and garners the greatest return from the public resource.
It should be noted that in other jurisdictions, PPP programs see greater levels of participation where there is an incentive for private operators to participate. Concessionaire agreements are an example of this incentive structure; however, other mechanisms exist that engage tax incentives and corollary benefits to be offered that strike a balance between increasing government revenue while offsetting inefficient government functions through privatization. While tax incentives are not envisioned in this recommendation, the Council of Economic Advisers wishes to note this potentiality for future developments of the CNMI’s PPP program.
Concurred by the Members of the Tourism and Infrastructure Committee
Governor’s Council of Economic Advisers