DPL barred from reissuing RFP on Mariana Resort lot

The Superior Court has issued an order prohibiting the Department of Public Lands from reissuing RFP20-RED004 while the lawsuit filed by Mariana E-Land Corp., owner and operator of Kensington Hotel Saipan, Coral Ocean Point, and Pacific Islands Club, is pending.

Pursuant to an agreement between E-Land, DPL, and acting DPL secretary Sixto K. Igisomar, Superior Court Associate Judge Joseph Camacho granted yesterday the preliminary injunction filed by E-Land that prevents DPL from re-issuing RFP20-RED004 while its complaint regarding the cancelation of the Mariana Resort & Spa property lease agreement is pending.

RFP20-RED004 was issued back in February 2020 to solicit proposals for the purpose of leasing and commercial development of the former Mariana Resort property in Marpi.

According to E-Land lawyer Charity Hodson, E-Land filed the complaint last week seeking a court judgment that would declare DPL’s decision to rescind the notice awarding E-Land the lease agreement as improper. In addition, Hodson said E-Land wants the court to issue a judgment against Igisomar for breach of his fiduciary duty.

Back on Feb. 20, 2020, DPL solicited proposals for the purpose of leasing and commercial development of the former Mariana Resort property in Marpi through RFP20-RED004.

On Oct. 12, 2020, E-Land submitted a proposal.

On Feb. 17, 2021, the DPL secretary at that time and the DPL legal counsel met with E-Land to discuss the amount of the total investment in E-Land’s proposal.

E-Land said it gave a presentation and showed DPL that although the initial rent fee proposed in E-Land’s proposal was 1% of the fair market value plus 2% of operating revenue, the rent proposed was actually greater than the rate of 5% fair market value and 1% of gross revenue.

DPL then requested E-Land to present a best and final offer. On Feb. 19, 2021, E-Land submitted its best and final offer to DPL.

E-Land said its proposed total investment was $220 million, of which $213.2 million would be directly related to development investment.

E-Land said it also offered a total of $6.8 million in public benefits including: $2.5 million toward the infrastructure development of the DPL Homestead Program; $1.05 million for the repair and upgrade of the existing Marpi swimming pool; $400,000 to develop a baseball field in Tanapag; and $2.85 million for a lifelong education center to facilitate learning about Micronesian traditions and culture.

On March 22, 2021, DPL issued a notice of award to E-Land.

On April 29, 2021, DPL issued a letter to E-Land with a draft lease attached. The draft lease included the rent terms in E-Land’s proposal which was based on 1% of the appraisal value.

Then, on June 18, 2021, E-Land said that Igisomar issued another letter to E-Land, advising that he was rescinding the award and canceling the RFP, which would be reissued.

According to the suit, Igisomar stated that the reason for the rescission and cancelation was because after DPL submitted the draft lease to the Office of the Attorney General for review for legal sufficiency, the Office of the Attorney General rejected it, stating that E-Land’s proposal should not have been considered because it was allegedly not compliant with the minimum rental rates set by regulation.

On June 28, 2021, E-Land met with the Igisomar and the DPL legal counsel where DPL reasserted its same position stated in the June 18, 2021 letter. In that same meeting, E-Land asked for time to assess its options.

According to the lawsuit, DPL agreed that it would give E-Land 30 days, ending July 19, 2021, to review the situation before DPL reissues the RFP.

On July 8, 2021, E-Land said it requested DPL to reconsider its decision to rescind the award based on the DPL’s secretary discretion to exercise his fiduciary duty in negotiating basic rent under the DPL Temporary Occupancy Rules and Regulations.

“[The] DPL secretary breached his fiduciary duty in rejecting a proposal that was in the best interest of the Commonwealth by failing to stand by the original, correct, assessment that E-Land’s rent fee was actually greater than the rate of 5% fair market value and 1% of revenue,” the lawsuit stated.