Mariana Resort urges resumption of talks with DPL for new 40-year lease

Mariana Resort & Spa issued yesterday an open letter to the CNMI government and the general public, detailing its reasons for pursuing a new 40-year public land lease. Saipan casino developer Best Sunshine International Ltd. is also asking the Department of Public Lands to grant them a 40-year lease for the same Marpi property.

The Japanese firm estimates $23 million in direct and indirect economic losses to the CNMI in the first year of business closure alone if Mariana Resort is forced to shut its doors.

Mariana Resort also noted DPL’s change of tune—from urging Mariana Resort for a new lease to now offering the same public land to Best Sunshine.

“There is other land available for the resort-casino. We see no legitimate or useful purpose to force the closure of Mariana Resort,” said Yoshihiro Kitami, president of Kan Pacific Saipan Ltd., which does business as Mariana Resort & Spa.

Kan Pacific is one of the only few remaining major Japanese investments in the CNMI. It has been in the CNMI for 36 years. Its current public land lease expires on April 30, 2018, and it is pursuing a new lease of up to 40 years with a commitment of at least $30 million in added investment.

Kitami reiterated the company’s belief that allowing Mariana Resort and the casino licensee “to both operate, both pay taxes, and both pay lease rental” is in the CNMI’s best interest.

“We are committed to the CNMI, and we look forward to resuming our talks with DPL for another 40-year lease,” Kitami said in a three-page open letter, copies of which were also distributed to members of the House of Representatives and Senate yesterday.

Rep. Anthony Benavente (Ind-Saipan), chairman of the House Natural Resources Committee, said yesterday he’s glad that Mariana Resort came out with an “open letter” clarifying its intention of continuing to operate in the CNMI.

“It’s only right that they state their reason for wanting to have a new lease, and for DPL and Best Sunshine to stop harassing them when their present lease won’t be up until 2018 and Mariana Resort wants to continue to operate,” Benavente said.

Benavente, echoing Mariana Resort’s stance, said DPL could have offered Best Sunshine other beach property sites for its integrated casino resort.

“Why does DPL have to force Mariana Resort out of business?” Benavente said.

The House Natural Resources Committee is planning to conduct an oversight hearing on the status of public land leases by hotels and what DPL has been doing to address these leases.

The Legislature’s approval is also required for any proposed lease of public lands over 5 hectares.

DPL Secretary Pete A. Tenorio said there is no decision yet to refer any new lease for the Mariana Resort property to the Legislature, “nor an offer made yet to Best Sunshine for the land at Mariana Resort.”

Gov. Eloy S. Inos said that granting a new lease for the Marpi land depends on a host of factors, especially the CNMI’s “long-term best interest.”

Mariana Resort commits a $30 million added investment under a new 40-year term, while Best Sunshine commits to investing a minimum of $3.14 billion in an eight-year period for its integrated casino resort.

“But again, it’s the longer-term best interest of the CNMI that’s going to be the primary criteria for the continued commercialization of the Mariana Resort property,” Inos said.

If and when Mariana Resort does not get a new lease, the property and the structures revert to the CNMI government.

“It’s a standard contract clause,” the governor said.

‘The issue’

Kitami said in and before 2013, DPL and Mariana Resort were in active talks for the renewal of the hotel’s public land lease in Marpi. Substantial progress was made, Kitami said, and it appeared that a renewal—or new lease—was imminent.

“However, it has now become public knowledge that Saipan casino-licensee Best Sunshine is trying to convince the CNMI government to put an end to Mariana Resort & Spa and transfer the property to Best Sunshine when the current lease expires,” Kitami said.

Kitami made clear Mariana Resort’s position that it should be allowed to continue to operate through the provision of a new 40-year lease “and” that the new casino-licensee develop its integrated casino on other available property.

Negotiations

In May 2013, DPL sent a letter to Kan Pacific encouraging it to extend its lease.

Kitami said in that letter, DPL stated it is optimistic that approval by the Legislature will be granted and that DPL will use its best efforts to obtain legislative approval for such an extension.

Negotiation for the lease ensued, with Kan Pacific submitting a proposal committing $30 million in additional improvements to Mariana Resort.

These include 100 additional hotel rooms, significant improvements to the golf course, expanded food and beverage operations, and the addition of a hotel infinity pool.

Kitami said as they continued trying to make headway on its proposal with DPL and move the negotiations toward a conclusion, they were not advised that another party (Best Sunshine) was communicating with DPL regarding its interest in acquiring the Mariana Resort property.

“As we now understand from Best Sunshine’s letter to DPL dated Sept. 2, 2014, they have been actively working to lease both the Mariana Resort property and the Paupau property just south of Mariana Resort (released by the RFP awardee Tan Holdings Co., which has since leased the Wing Beach property just north of Mariana Resort),” Kitami said.

6 reasons

Kitami cited six major reasons why Kan Pacific is good for the CNMI and should stay on the islands.

“We are a great hotel,” Kitami said, citing their facilities. “We are a good corporate citizen.”

Kitami also said that Kan Pacific is community-minded, and “contribute strongly” to Japanese tourism arrivals and investment.

Kan Pacific is the longest standing Japanese hotel owner on Saipan, serving an average of nearly 30,000 Japanese guests per year.

Japan used to be the CNMI’s main tourism market. This fiscal year, they were overtaken by Korea, while arrivals from China and Russia continue to soar.

Kitami said the Japan market should not be disregarded. It should be preserved and cultivated, he said.

“The China and Russian markets are dependent on the visa waiver program, which can be changed or ended at any time by the U.S. Department of Homeland Security,” he added.

Lastly, Kitami said Kan Pacific is “trustworthy.”

“Forcing Kan Pacific to close Mariana Resort and leave Saipan would have undesirable consequences,” Kitami said.

These include the decrease or loss of the Japanese market and supporting air service, loss of millions of dollars annually in taxes and lease payment, job loss for 167 employees, loss of revenue and jobs for support services or contracted businesses, negative impact on related Japanese investment, among other things.