DPL: IPI violated land lease terms

Teresita A. Santos

The Department of Public Lands has issued a notice of violation to Imperial Pacific International (CNMI) LLC for failing to remit $250,000 to DPL to replenish the required security deposit, among other alleged violations of the land lease agreement.

DPL Secretary Teresita A. Santos, who was in an acting capacity at the time, issued the notice of violation to IPI president Lingli Cai last March 31.

According to DPL’s notice of violation, a copy of which was obtained by Saipan Tribune yesterday, Santos informed Cai that failure to cure the listed violations within 30 days will place IPI in automatic default of the lease and that DPL will be forced to take corrective action.

Santos issued the notice of violation despite IPI’s remittance of $150,000 in lease rental to DPL and submission of its revised appraisal report dated Nov. 7, 2022, as prepared by LBT Appraisal, and the 2021 audited financial statement prepared by the accounting firm Burger, Comer, and Magliari on Nov. 16, 2022.

Santos stated in the notice that despite IPI’s payment of account and submission of documents last Nov. 16, the company failed to cure the violations as provided in DPL’s Oct. 18, 2022, notice of default issued by then-DPL secretary Sixto K. Igisomar.

Another uncured violation, she said, is IPI’s failure to submit to DPL a copy of IPI’s valid fire and damage insurance policy, with extended coverage endorsements.

Santos said the fire and damage insurance policy should be jointly in the names of IPI and DPL, covering the full insurable value of all permanent improvements on the premises.

She said IPI failed to submit to DPL a copy of the company’s valid commercial general liability insurance policy for the premises and operation, with DPL and the CNMI government named as co-insured, with the required minimum coverage amounts.

The secretary said IPI also failed to submit to DPL a copy of all licenses, certificates, permits, and other required authorizations from any other government authorities having jurisdiction over the operation of IPI under the lease, specifically including a certificate of occupancy, valid business license, and most recent filed annual corporation reports.

As for IPI’s payment of $150,000 and submission of documents, Santos said DPL reviewed the revised report prepared by LBT Appraisal and concurs with the firm’s conclusion of the market value of the unimproved land properties in the amount of $4.14 million.

She said IPI’s guaranteed annual minimal lease rental for the second five-year period beginning April 29, 2020 through April 28, 2025, at 5% of the $4.14 million appraise value, is $207,000 annually.

Given the lease rental schedule for the second five-year period, along with IPI’s $150,000 remittance, DPL made adjustments on IPI’s account, showing a credit of $25,426. Thus, Santos said, with the adjustment showing credit minus the annual lease rental, IPI’s lease rental amount due is $179,761.

She said this amount will cover the lease rental period beginning May 1, 2023 through April 30, 2024, and it is due by May 1, 2023.