CNMI Comprehensive Economic Development Strategic Plan 20092014

1
CNMI Comprehensive Economic Development Strategic
Plan2009-2014

• Presentation by
• CNMI CEDS Commission
• Updated 1/29/09

2
Objectives

• Provide an overview of the CNMIs current
  economic challenges
• Develop a strategic plan that prioritizes
  economic development projects according to their
  ability to create jobs and other positive impacts
  on the economy.
• Utilize all available resources, both public and
  private, to help the CNMI remain economically
  self-sufficient.

3
Economic Driver Tourism

• Adversely impacted by
• Global economic conditions, particularly in Japan
  and Korea
• Increasing competition from less expensive Asian
  destinations
• Air service shortage
• Difficulty in stabilizing international flights
• Loss of many inter-island flights
• Loss of ferry schedule to Tinian (down to 1x per
  day )
• Rising costs of power, fuel, shipping, imported
  food
• Rising minimum wage
• Uncertainty over federalization. Possible loss
  of China Russia visas

4
Economic Driver Apparel Manufacturing

• Peaked in 1999 with 34 firms, 17,000 employees,
  1B in exports
• Contributed more than 80M in direct revenues to
  the CNMI government. This represented as much
  as 30 of the CNMI budget.
• Rapid decline with the opening of world trade
• Rising costs of doing business, we could not
  compete against China, Bangladesh, Vietnam,
  Pakistan
• 3 remaining factories scheduled to close in
  January 2009

5
External Factors Affecting the CNMI Economy

• Cost of Fuel
• Insufficient local fuel infrastructure presents a
  significant challenge for public power and
  aviation fuel
• Outbound cargo dropped from 140 containers / week
  to only 5, causing a rapid increase in shipping
  costs for all goods in and out of the CNMI.
• Tariff rates for shipping have gone up 115 in 18
  months, affecting the price of all goods.
• Out migration of workforce
• Because of increasing costs of power and the cost
  of living, residents and businesses are leaving
• Guam Military Build-up
• Expected to foster an out-migration of people
  from the CNMI work force to Guam
• We also expect some economic benefits as the
  military will use Tinian for training exercises
  and we also expect more tourism from military
  families

6
Internal Govt. Challenges

• Declining government revenue represents a
  depression 40 losses over the past few years
  (next slide).
• Commonwealth Utilities Corporation
• Critical financial condition and rising costs
• Dilapidated equipment affects residents and
  businesses with frequent power outages
• CUCs condition is a deterrent to new investment
• Unlike other jurisdictions, many CNMI government
  services must be duplicated to serve 3 islands
• Saipan, Rota, and Tinian

7
How the declining economy
has affected CNMI government
revenue (in Millions)
8
Concurrent Crises Affecting CNMI

• Transportation shortage
• Education
• Professional staffing issues
• Accreditation issues at Northern Marianas College
• Dilapidated school facilities
• Health
• Professional staffing challenges
• Costly medical referral
• Labor
• Power Fuel Costs
• Decreasing rate of new investment
• Uncertainty due to federalization of immigration

9
Commonwealth Economic Development Strategic Plan

• We are actively looking for the light at the end
  of the tunnel to maintain self-sufficiency and
  fix our economy.
• 18-member public private sector commission was
  appointed in January 2008 by Governor Fitial.
• Grant from the U.S. Economic Development
  Administration
• In December, hired Management Analysis Inc. (MAI)
  as our consultants
• Experts in public-private-partnerships (PPPs),
  economic development, government efficiency,
  management consulting
• Field work to be completed in January 2009

10
CNMI-wide

• Transportation
• Inter-island Super Ferry - 40M
• Would benefit economic development for Saipan,
  Tinian, Rota. Guam
• Ship Building Facility
• Roads
• Secondary roads resurfacing and hazard
  elimination for Saipan, Tinian Rota - 20M
• Includes construction resurfacing and repaving of
  secondary roads on Saipan, Tinian and Rota,
  purchase of additional signs
• Traffic light system replacement (12) - 6M
• Solar Powered Street Lighting - 3M

11
Saipan / CNMI-wide

• Alternative Energy - 45M
• Develop an energy supply that is renewagle,
  sustainable, environmentally-friendsly and
  economical. Evaluate the potential for
  development of a geothermal power system based on
  findings of exploitable geothermal formations and
  the economy of distributing the energy

12
Saipan

• Commonwealth Utilities Corporation
• FOCUS Rehabilitation financial stability,
  cost recovery sustainability, ongoing
  maintenance. Possible privatization or
  public-private partnerships. Privatization of
  CUC power generation - 500,000
• Power
• Rehabilitation maintenance of existing power
  generation - 6.8M (have 5.5M now) 3 cents /
  kwh hour to generate funds
• Alternative energy exploration of geothermal
  for long-term solution towards affordability /
  sustainability
• Wastewater (see costs next page)
• Rehabilitation of 38 lift stations, add
  redundancy
• Sadog Tasi Agingan repair / upgrade treatment
  plants
• Kagman site construct of sewer system,
  connect with Agingan

13
Saipan

• Education
• Additional classrooms for full time kindergarten
• Repairs maintenance at schools - 5.635M
• Upgrade IT facilities for all schools
• Relocations / expansions / consolidation
• Possible land exchange for commercial development
• Work Force Capacity Building
• Northern Marianas College Renovation - 15M
• Small Business Incubator - 600K
• To include training
• Work Force Capacity Building WIA programs

14
Saipan

• Water
• Expansion upgrade of existing water
  infrastructure to comply with EPA court order on
  water / wastewater - 100M
• Water leak detection
• Kagman watershed
• Public Health
• Additional medical professional capacity
• Software systems to improve efficiency and
  collections
• Privatization of billing system
• Commonwealth Health Center Building repairs /
  improvements - 4M

15
Saipan

• Commonwealth Ports Authority
• Airport
• PA System - 1M
• Renovation of Terminal Building - 35M
• Arrivals Area - 18M
• Better baggage handling
• Building renovation - 4M
• Runway rehabilitation by 2010 - 15M - 20M
• Puerto Rico Dump Closure - 11.8M
• Meet compliance with EPA Administrative Order,
  fully close.

16
Saipan

• Destination Enhancement
• Additional tourism promotion to stabilize
  international air service - 3M annually
• Revitalization of Paseo de Marianas - 2M
• Add shade and bathroom facilities
• International Sports Complex - 3M
• Kalabera Cave - 1.5M
• Susupe Lake - 1.5M
• Marine Monument - NEW

17
Tinian

• Transportation
• San Jose Harbor Rehabilitation - 45M
• Breakwater repair - 25.5M
• Dredging ( -28 ft. now) adequate for existing
  use, but not for military
• Pier repair
• Potable water to harbor
• Build container yard
• Airport
• Instrument Landing System for Tinian Airport -8M
• Construction by July 2009, completion by early
  2010
• Airport Fuel Storage - 6M
• Road improvements to handle haul load
• Route 201 and 202
• Roads past the airport to military leased lands

18
Tinian

• Public Works
• Wastewater treatment plant - 15M to 25M
• To be inclusive of collection system, lift
  stations, plant
• Army Corps working on Tinian design
• Sanitary Landfill Relocation - 20M (8M for road
  12M for 1-cell landfill)
• Must close old dump by 2010 and open a landfill
  in Pina area
• Need to build road to the new site

19
TINIAN REVENUE-GENERATING PROJECTS

• Local funds with federal grants
• Natibu Park (HUD Grant) completion 3/09
• Amphitheatre with concession stands
• Sabalu market, flea market, fiestas, special
  events, concerts, sporting events
• Kastiyu Wildlife Park
• Ecotourism camping site with animals, cliff
  fishing
• Tinian Public Market (USDA)
• Value-added USDA-inspected mobile facility to
  process local produce, livestock, seafood
• Aquaculture Industry
• Abalone, mussels, tilapia, oysters
• Tangan-Tangan charcoal export new industry

20
Tinian TOURISM Projects

• Revenue-generating tourism projects
• Taga House Museum
• Tinian Botanical Garden

21
Rota

• Public Health - Dialysis facility - 1.5M
• Transportation
• West Harbor Rehabilitation - 20M
• New plan needs to be done, as 1996 plan is now
  outdated Expand turnaround basin, dredge from
  existing -16 feet to -30, breakwater, dock
  improvements, crane, move port building from
  current location which is too close to water and
  container, move existing recreational boats
• Airport fuel farm - 6M
• May consider temporary fuel storage pilot project
  as an alternative
• Would also need a fuel filler truck
• Widening of Runway (FAA 6M)

22
ROTA

• Utilities
• Sanitary landfill Relocation - 11M
• 1.328M is already available for siting
• Sewage treatment plant
• Agriculture Industry
• Co-op to deal with marketing, military sales,
  address costly items like new technology, heavy
  equipment that can be shared, value-added
  processing facilities, technical assistance on
  getting USDA grants
• Crop insurance (based on U.S. crops, does not
  cover taro, etc.)
• Additional water lines for irrigation
• Facilities for fumigation, others to meet FDA
  requirements
• Specialty farming, such as organic products,
  flowers, etc.

23
ROTA DESTINATION ENHANCEMENT

• Ecotourism - 1M grant
• Continue to maintain or enhance such sites as
  the Bird Sanctuary
• Historical ancient Chamorro sites
• Open up additional access
• Preservation / interpretive signage, educational
  materials, maintenance
• Chamorro Village with water sports facilities
• Pinatang Beach Park
• Opportunity for public-private partnership /
  concession for 5 years, like Managaha
• Tweksberry Park
• Opportunity for sailboats, further development of
  new revenue-generating facilities

24
ROTA PRIVATE INVESTMENT

• HOTELS
• Available to be taken over by private investors
• Paupau Hotel 50 room hotel with pool
• Sunset Villa Hotel 14 beachside rooms on 6K sq
  meters - 750K from CDA
• Casino gaming
• Water bottling

25
Northern Islands

• Volcano Monitoring System
• Pagan - 400K additional funds
• Equipment already purchased for 350K by USGS.
  Lacking funds for shipping and installation may
  cause CNMI to lose this equipment
• Agrihan
• Alamagan
• These islands prioritized for the next 5 years
  because they have residents. Pagan may have
  military training activity.

26
Criteria for Prioritizing Projects

• Tourism Impact
• Defense Impact
• Employment Impact
• Maximizing Leverage of Private Sector Investment
• Financial Stability
• Local Community Priority
• of CNMI Population to Benefit
• Sustainable Growth
• Implementation Timeline

A weighted criteria was developed to measure and
rank projects
27
Possibilities for Funding

• Local Funds
• Federal Grants
• Including EDA, FHWA, USDA, DOT, DOI, DOE, EPA,
  DOD, SBA, HUD, National Endowment for
  the Arts
• Federal Economic Stimulus Package
• Private Development
• Privatization
• Public-Private Partnerships
• Private charitable foundations

28
Project Ranking

• CUC (Privatization / PPP) 65.5
• High Speed Interisland Ferry serving Saipan,
  Tinian, Rota, Guam 58.33
• Rota Pinatang Beach Park (PPP) 57.5
• La Fiesta San Roque Mall Redevelopment (PPP)
  56.5
• Alternative Energy Development 56
• Garapan Housing Redevelopment (PPP) 55.5
• Paseo de Marianas Improvements 53
• Garapan Elementary to Developer (PPP) 52.5
• Rota Agricultural Co-op 52.5
• Tinian ILS 50
• Tinian Port Breakwater - 50
• International Sports Complex 48
• CHC Rehabilitation 47

29
Project Ranking, CONT.

• Tinian Airport Fuel farm - 46
• Tinian USDA processing facility 45.5
• Rota fuel farm at the airport 45
• Rota Seaport Rehabilitation 45
• Saipan Water plant renovations 44.5
• Saipan School repairs 44.5
• NMC Renovation 44
• Small Business Incubator 44
• Rota Landfill 42.5
• Saipan Airport PA System 42.5
• Saipan Water / Wastewater Improvements 42
• Saipan Traffic Light Repairs 42
• Saipan Road Projects 41.5

30
Project Ranking, cont.

• Saipan Solar Street Lights 41
• Kalabera Cave 40.5
• Susupe Lake 40.5
• Saipan International Airport Terminal
  Improvements 39.5
• Saipan Airport Fuel Farm 39
• Tinian Seaport Dredging 38
• Pagan Volcano Monitoring Station 36.5
• Marpi Landfill Expansion 36
• Rota Dialysis Clinic 32

31
Next Steps

• Publication by February 16
• Public outreach
• Publish plan on Dept. of Commerce website in
  hard copy book form
• Economic summit in the CNMI April 2
• Department of Interior Conference in Hawaii
  April 6-8
• Develop implementation plan
• Identify projects for quick wins
• Identify funding sources write grants
• Develop PPP concepts for targeted projects
• Remain committed to implementation of the plan