New conditions for IPI project

The CNMI Lottery Commission and Imperial Pacific International (CNMI) LLC have agreed on the conditions set in the amended casino license agreement, which was signed before the end of office hours last Friday.

The lottery commission—composed of chair Mark Rabauliman and commissioners Larrisa Larson and Robert Guerrero—unanimously voted to grant IPI’s request for extension to Feb. 28, 2021 in order for IPI to finish its multi-million-dollar initial gaming facility.

The original deadline was last Friday, Aug. 31, and IPI’s original request was only for two years—Aug. 31, 2020.

“The essence of all of this is everybody wants it to be up and running, but taking those things into consideration, we want to be able to give each other enough buffer, enough time to meet whatever challenges. Hopefully, with the exception national disasters, that everything [will be] tightened up and completed in a timely manner,” said Rabauliman.

After an almost two-hour long meeting that same day, Rabauliman said they needed to make sure all the language that they agreed upon, including the notes they took down during Wednesday’s public hearing, are included.

Assistant attorney general Chris Timmons also had to review the amended CLA before both representatives of both parties—Rabauliman and IPI Special Projects senior vice president Viola Alepuyo—and the government sign the final draft.

Alepuyo confirmed to Saipan Tribune that she and Rabauliman signed the amended CLA late Friday afternoon, with acting governor Victor B. Hocog the last to affix his signature around 5pm.

Rabauliman also clarified that if amendment No. 6 hadn’t been signed by 11:59pm last Friday, even though they had already agreed to grant IPI’s extension request, then the casino operator would have violated amendment No. 5 of the CLA.

If ever the new conditions for the agreement were not signed after Aug. 31 at 11:59pm or 12 midnight of Sept. 1, that is only when the Commonwealth Casino Commission would come in and impose sanctions since IPI would have already violated the deadline that was set in amendment No. 5 of the CLA. CCC deals with the enforcement of the CLC.
 
New conditions

Both parties, after almost three days of negotiations, agreed that fines would be imposed if IPI does not meet the new deadline of Feb. 28, 2021. Liquidated damages were inserted in amendment No. 6 where 1 (b) states that a $5,000 per day deadline will be slapped if IPI fails to meet the IGF’s construction completion date.

“[The] licensee agrees that the unexcused delay in the construction completion of the [IGF] shall result in imposition of liquidated damages in the amount of $5,000 per day [or] up to a total of $1,825,000 per year or more, depending on the length of construction completion delay,” the revised CLA states.

Alepuyo said the construction will be deemed completie when the Department of Public Works issues a certificate of occupancy permit. “If we don’t meet that, then it is only when we will be assessed a $5,000 fine a day. It will be $1,825,000 if we did not complete it in one year. That’s basically $5,000 multiplied by 365 days,” Alepuyo said.

A consideration clause was also included in the draft wherein IPI agrees to donate $500,000 to the Commonwealth Healthcare Corp. “[The] licensee agrees that in consideration for the extension of the implementation schedule for the [IGF] construction completion for Feb. 28, 2021, a $500,000 donation will be made to CHCC for the purchase of medical equipment as determined by CHCC.”

Alepuyo said they also agreed to have a monitoring system in place on the construction progress of the IGF, which was stated on 1. (a) in the initial draft of the amended CLA.

“[IPI] shall submit no later than 15 days after execution of this amendment No. 6 to the [CLC] a construction milestone schedule, which shall provide a list of pending tasks and projected completion dates,” said in the CLA’s amendment No. 6.

“Pacific Rim Land Development LLC or the construction management, shall submit a quarterly report to the [CLC] with detailed explanation of [IPI’s] progress of the CMS. The CNMI [DPW] shall certify the completion of each CMS and the CNMI Department of Labor shall certify Occupational Safety and Health Administration compliance as submitted by the [CM].”

IPI is required to submit to the CLC a biannual audit as certified by an external auditor pertaining to the IGF’s construction. The construction completion is when the local DPW had already issued the certificate of occupancy permit.

IPI would also provide the Development Plan Advisory Committee a proposed implementation schedule for the completion of all elements of the licensee development proposal requirements. The IGF implementation schedule, when DPW had issued the occupancy permit, is on Feb. 28, 2021.

The IGF includes the following elements: a 329-room four- or five-star luxury hotel; 14,140 square meters of gaming area; 3,870 sqm of food and beverage outlets; 186 sqm of retail space; 930 sqm of meeting space; 15 villas; 1,500 sqm of spa/fitness area; and associated parking, site improvements, landscaping, furnishings, fixtures, utilities, and infrastructure.
 
Viable industry

Rabauliman said that granting the amendment was a long and arduous road, with their decision based on the goals of the CNMI government and supported by the community. “The governor has an interest in bringing this important issue to our people, that’s why he delegated it to this body [CLC]. I thank those who have participated and contributed in the process. It has strengthened our understanding of the community’s needs in an open and transparent process,” said Rabauliman.

“Our decision today is based on the goals of the CNMI and the government to support a creation of a viable industry that is operated in a fair and safe way for all who call these islands home.”

He added the CLC wants to make sure that the new target completion date will be met, all safety and labor standards upheld, the project completed, and be fully operational for it to become a contributor to the CNMI’s economy.

“I believe that through this [negotiations] process that we’d done that… It was a back and forth with regards to being able to hold it down in construction terms. So, rather than get bogged down with the technicalities we agreed upon the end of the extension period [from Aug. 31, 2020 to Feb. 28, 2021].”
 
Public support

Almost 20 members of the community—from private citizens to members of the CNMI Legislature—supported the extension but certain conditions had to be imposed like fines and regular progress reports, which was included in amendment No. 6.

Rabauliman said the summary of the more than two-hour long public comments last Wednesday showed that everyone wants the project to be completed and fully operational. “During the public comments, of course, we heard that everybody did support the extension. Just like everybody here in the community, we do want it [IGF] to be completed.”

“I want to say that during our discussion there were a lot of assurances but I’m sure the community would say that assurances were made in the past. But I feel very confident, outside an act of God, that mutually we want to see it succeed and be completed.”

He added that both parties agreed that giving IPI a more than two-year extension would be enough for the casino-hotel investor to finish the project. “We sat through the two-hour long public comment and somebody wants to stick to the timeline while someone want to give them five years so we don’t have to go back and forth again.”

“The essence of all these is everybody wants to see it up and running. But, taking those things into consideration, we want to give each other enough buffer. Enough time to meet whatever challenges.

“Holding IPI accountable was also the consensus of the public, that’s why CLC decided to add two certifying agencies, the local DPW and local DOL-OSHA, to ensure that the [construction milestone schedule] are met.

“That it is something that’s mutually agreed upon. Once they submit it we have our professionals review it, agree upon it, and sign off and that will hold them accountable to reporting with regards to the progress of the project. DPW, OSHA-Labor, aside from DPAC will monitor the progress of the project.”

Alepuyo thanked the public for its support of giving them an extension. “The CLC did what they did and we’re very humbled for the outpouring of support that the people expressed. It is not easy to speak like that in public. The overwhelming message was how would this affect our lives and economy if this business folds.”

She added that they always make sure that IPI, officials and employees, would comply with all regulations. “We, the employees of IPI, we work very hard, I know that there are proponents out there that say we don’t follow the law, but we do follow. The majority of employees work very hard and they are all law-abiding citizens.”