Admin wants to be rid of La Fiesta

For some 10 years now, the government has been paying $200,000 in annual lease for the former La Fiesta Mall in San Roque without generating any revenue from it. After failed attempts to offer the property to investors willing to develop the former mall, the Inos administration now wants to be get rid of this liability.

However, the administration and Bridge Capital LLC, which bought interest in the land in 2007, have yet to even discuss options for the idle property.

The Senate Fiscal Affairs Committee, meanwhile, will call in Bridge Capital and other agencies to discuss the property and the government’s obligations.

“The government continues to incur liability. It’s hard for the government because La Fiesta is not making any revenue. We asked Bridge to come up here and bring documents related to whatever agreement they had with the government and go from there,” committee chair Sen. Jovita Taimanao (Ind-Rota) told Saipan Tribune yesterday.

Bridge Capital, through its lawyer, Michael Ernest, asked the government—through the House and Senate—to pay its overdue lease of $200,000 for fiscal year 2013. Another $200,000 lease payment is due by Sept. 30 this year.

Gov. Eloy S. Inos’ proposed fiscal year 2015 budget of $134 million also does not include a $200,000 lease payment for La Fiesta.

Besides possible return to Bridge Capital, the governor is also looking at “just assign the contract” to an investor interested in developing La Fiesta.

“We hold a lease on the property. It should be easy enough for us to just assign our interest to the new developer, whoever that is. …That’s what’s on the table. We’re not going to ask for money or more money. We will assign our interest and let them continue to pay the annual [lease],” the governor said.

When asked which companies are interested in the property, Inos said that most of them are architectural firms, “but they haven’t gotten back” yet.

“We like to get rid of it. No, seriously,” Inos added.

The other option is to return the property to Bridge Capital.

“Unless I’m mistaken, in this case, Bridge…could basically just declare default and take the property back. Why do we have to negotiate for that?” he said, adding, however, that he’s willing to negotiate when it comes down to it.

The governor said there’s never been any discussion with Bridge Capital about “how to manage the property, how to dispose of it.” Inos said he does not know either whether Bridge Capital has plans to renovate the facility.

“About two years ago, one of the reasons why we supported the video lottery terminal was to allow for it to be operated at La Fiesta, so we’re going to use video lottery as basis for the place to be renovated. But even that didn’t [materialize],” he said.

The Senate Fiscal Affairs Committee originally scheduled a meeting with Bridge Capital and other government agencies last Tuesday but because many of the committee members had prior commitments, the meeting has been rescheduled for next week at the earliest.

Taimanao said that after the meeting, the committee will make recommendations relating to the government’s obligations and what the government can do to stop incurring liabilities.

“We would like to find out whether the government can just return the property because it’s not generating any revenue anyway. But before we make a decision, we would like to meet with all the parties involved,” the senator said.

The CNMI government has been paying $200,000 annually for the La Fiesta mall property at least since 2004—a year after the government bought the complex in 2003. The government stopped paying only in fiscal year 2013.

This means the government has already paid $1.8 million at least for the annual lease but has not gotten any penny from it since day one.

The administration of then-governor Juan N. Babauta originally gave Northern Marianas College $3.5 million to purchase a property for a Pacific Gateway Project, which aimed to make NMC the region’s “education hub.”

NMC, using the funds to make the initial payment, bought the former La Fiesta Shopping Complex for $7.5 million on Aug. 18, 2003. The $4-million balance was to be paid in increments of $200,000 annually until paid in full. In 2004, the Office of the Governor under Babauta’s time took responsibility for the property. Succeeding administrations inherited the property and the liability.

A little over a decade after the purchase, the government is still incurring $200,000 in annual lease payments, while the mall structure has deteriorated due to neglect and vandalism. Crimes have since taken place at the former mall.

The Inos administration tried to offer the property to any interested developer but it has had no luck so far. A few months ago, government officials and employees led by Inos and Lt. Gov. Jude U. Hofschneider cleaned up the surrounding areas of La Fiesta.