3 contracts arising from Outer Cove lease questioned

The Senate Committee on Resources, Economic Development and Programs aimed its sight yesterday into the Outer Cove Marina lease following findings of several other contracts that have sprung outside the main agreement.

During the resumption of the oversight hearing, committee members raised concern such contracts may have violated the terms of the lease agreement that was approved by the 9th Legislature.

The deal gave a 15-year lease to Marine Revitalization Corp. to build and operate the marina and was forged with the Department of Lands and Natural Resources and the U.S. National Parks Service during the previous administration.

According to Sen. Ramon S. Guerrero, the terms of the lease do not provide for subcontracting or forging other accords outside of the main agreement since they will also have to get approval from NPS.

At least three contracts came out of the lease agreement, including fendering agreement with the boaters and construction of the breakwater between the governor and the boaters, he said.

The Attorney General’s Office should determine whether the main agreement is legal as well as the others that were attached later, added the senator.

“The Ninth Legislature is very specific of its [terms],” he told the hearing. “We have to [find out] whether the present agreement between MRC, DLNR and NPS is binding or not. If not, then it should be voided.”

MRC president Anthony Pellegrino admitted signing the fendering agreement “under duress,” saying he was coaxed to resolve the problem at that time.

“I never agreed to that concession. It would be very unfair. . . NPS said ‘go ahead and we will take care of that’,” he told the committee during questioning. “I never agreed from day one.”

Missing

Public Auditor Leo L. LaMotte reiterated his earlier report that the lease agreement itself is flawed, citing absence of decision on how much rates would be imposed or even how much money can be spent for the construction.

“The original lease does not constitute much of anything because too many elements of the contract are missing… It virtually doesn’t cover anything except the fact that the marina was going to be built with the permission of the Legislature,” he explained.

Coastal Resources Management Acting Director Peter Barlas also disclosed the agency approved revisions made on the marina, although the Army Corps of Engineer specified such structures as floating docks.

Changes made to the original plan were believed to have pushed the cost of the project, from initial estimate of $1.2 million to over $3.6 million when completed, according to the committee’s findings.

MRC is now trying to recover its investments through rate increases, such as passenger departure and berthing fees–a move opposed by boat owners and tour operators who have maintained that the marina is not even safe.

Mr. Guerrero said the original plan of a $1.2 million marina was precisely the reason why lawmakers approved the lease in the first place.

“Here’s Mr. Pellegrino [who was] very generous and he was going to [build] this marina at $1.2 million. That was the recommendation of the [legislative] committees,” he said.

He then asked Mr. Pellegrino if he would still forge ahead with the project had he known it would cost him $3.6 million, the embattled MRC president said, “yes, I would build it because I need a place for my boats and so do for the entire Saipan.”

The panel is expected to wrap up its oversight and come up with a report soon in an effort to resolve the controversy, according to its chair Senate Floor Leader Pete P. Reyes.