Pete A: Mariana Resort land must revert back to the DPL

The Department of Public Lands is constitutionally prohibited from entering into a new lease with Kan Pacific, Ltd. for its Mariana Resort and Spa property, according to DPL Secretary Pete A. Tenorio in a letter to Kan Pacific president Yoshihiro Kitami on Monday, emphasizing that Kan Pacific’s 40-year lease must expire and that no resolution passed by the Legislature could bind DPL to negotiate a renewal of the lease.

DPL announced in June this year its decision to seek competitive bids for the Mariana Resort property, despite hotel officials alleging they had received assurances from DPL for a new lease. In July, Rep. Vinson Sablan (Ind-Saipan) filed House Resolution 19-29, “encouraging the administration and the secretary of Public Lands to negotiate a new lease [for] Kan Pacific Saipan, Ltd.”

When contacted last night, Mariana Resort general manager Gloria Cavanagh declined to comment, saying the matter is now with their legal counsel.

Saipan Tribune also tried to obtain comments from Sablan but he said he will issue his official comments today.

In his letter Monday, Tenorio chose to share his thoughts on the legislative resolution with Kitami, noting “several misconceptions in the resolution.” Tenorio did not elaborate.

Tenorio said DPL is prohibited from granting a “new lease to Kan Pacific” until such time that the public land and improvements that Kan Pacific is currently leasing automatically reverts to the government upon the natural expiration of the current lease of 25 years with its 15-year extension for a total of 40 years.

The Kan Pacific lease expires on April 30, 2018.

Tenorio said 40 years is the “maximum leasehold period allowed by the CNMI Constitution.”

“No additional extension or new lease is specifically authorized by the Constitution,” Tenorio said. “And a resolution by our Legislature supporting or ‘encouraging’ the administration and DPL” for a new lease “could not bind DPL” to enter into one.

Tenorio said the Constitution mandates that after the expiration of 40 years of a public land lease like Kan Pacific’s, all public land, together with all improvements “reverts to the government.”

At such time, Tenorio explained, DPL has two options: one, to negotiate a second lease with the lessee who previously owned the land, or two, put the land out to bid “to assure others the opportunity to submit proposals.”

“…in the interest of transparency, an RFP is in order,” Tenorio said.

“I hope that you fully appreciate the requirement of the CNMI Constitution with the respect of leasing of public lands,” he added.

Tenorio pointed out it is the responsibility of every public land lessee to “fully understand our CNMI Constitution.”

“Unless the Constitution is amended, DPL has no option but to strictly adhere to its constitutional mandate,” he said.

Kan Pacific’s Mariana Resort has been on island for 37 years and is seeking a new lease with a commitment of some $30 million in added investment. The hotel is seen as an important link to a dwindling Japanese tourism market in the CNMI, and has recently been pumping out full page ads and radio advertisements on its commitment to the community in light of the DPL decision.

Last month, Mariana Resort general manager Gloria Cavanagh said there was concern as to whether the fate of their establishment would be subject to a process that is “improper and unfair.” Cavanagh was responding to reports of “secret” meetings between DPL, lawmakers, and with Best Sunshine Ltd., a potential bidder of the Marpi property that is seeking to complete a billion-dollar project to build an integrated casino resort on Saipan.

DPL’s decision is a policy call by the administration of Gov. Eloy S. Inos to bid out existing public land leases.