RFP for Mariana Resort land out

The Department of Public Lands opens today a competitive bid process to lease public lands currently held by Mariana Resort and Spa in Marpi, moving forward with a decision that the Japanese hotel owner has criticized as a breach of contract by the government.

The request for proposal announcement, which is on Page 16 of today’s Saipan Tribune and signed by acting Public Lands Secretary Patricia Rasa, describes a bid for lots used for racecar tracks, mini golf courses, and the Marpi hotel itself, its cottages, villas, and maintenance and sports facilities, and other vacant lands held by Kan Pacific Saipan, the Japanese company that owns the resort.

In square meters, the total property amounts to 1.61 million square meters.

The Kan Pacific lease expires on April 30, 2018.

DPL’s RFP announcement comes almost a week after Kan Pacific held a rally last Saturday to garner public support for an extension of their lease. That rally drew hundreds and was led by Kan Pacific founder Nauki Kitami, his nephew and now Kan Pacific president Yoshihiro Takami, and resort GM Gloria Cavanagh.

Cavanagh did not answer repeated calls to her phone after office hours last night.

Kan Pacific lawyer Joseph Iacopino had said in a letter to DPL last month that DPL was in no position to issue bids for their resort property. He said this would constitute a “breach” of the lease agreement between the hotel and the CNMI government.

According to copies of the 2003 amended lease agreement—copies of which were obtained by Saipan Tribune yesterday— “At least five years before the expiration of the lease extension term, the lessor shall inform the lessee whether it intends to initiate the transition of the management of the facilities to lessor.”

Within 90 days of such notice, the lease states, parties must enter into a management and transition plan to train U.S. citizen workers to assume management.

“DPL was contractually obligated to give notice of intent,” Iacopino said last month. “However, such notice was not given, the deadline passed and, instead of giving such notice, DPL encouraged Kan Pacific to enter into subsequent lease with another 40-year term.”

In that letter, Iacopino describes a timeline of negotiations between DPL and Kan Pacific in recent years that suffered “apparent interruption,” blamed on Best Sunshine International Ltd., Saipan’s exclusive casino licensee, who has since confirmed an aggressive pursuit of these Marpi lands.

“…It’s a business. And we will be as heavily involved as we possibly can,” Best Sunshine CEO Mark Brown told reporters last week.

“We are here on island and we have proven the type of business and type of neighbor that we are, so we are not going to sit back and watch someone else go in for the RFP,” Brown said. “We will be right there side by side with whoever else is there.

Robust competition

In response to an Open Government Act request last month, DPL Secretary Pete A. Tenorio said Best Sunshine and “others” have also indicated a desire to bid for the property.

“We expect robust competition for a parcel of this magnitude,” Tenorio said in his Nov. 2 letter to Saipan Tribune.

“It is my intention to proceed as previously disclosed, and issue an RFP in time to ensure a transaction is ready for completion upon the expiration of Kan Pacific’s lease. If Kan Pacific makes the best proposal, we welcome them to continue to operate Mariana Resort. If not, we welcome the bidder who proposes the highest and best use for the entire premises that will generate the most income for the collective owners of public lands,” Tenorio said.

Tenorio was responding to an OGA request for all correspondence “inclusive of but not limited to emails, letters, and their attached figures, charts, maps, and draft lease agreements” between DPL and Best Sunshine.

Tenorio, however, called the request “overbroad.” He said the request encompasses information that falls outside the legal definition of public record.

“The only records that the DPL is required by law to keep or which are necessary for the DPL to keep” are related to its discharge of its duties as imposed by law.

“Since DPL is not engaged in negotiations or discussions with either [Best Sunshine or Kan Pacific] to new leases in Marpi, there is no correspondence that DPL needs to keep to discharge its duties imposed by law that are relevant to your inquiry… It is our position that there are no responsive public records relative to the allegations that you seek to confirm or refute,” Tenorio said.

Major issue

In an interview this week, House Fiscal Affairs Committee chair Rep. Tony Sablan said the Marianas Resort lease is a “major issue.”

“Not only for Marianas Resort but you also have other major hotels whose leases are coming up. What this government does or how it handles the Mariana Resort situation can greatly impact the other hotel leases as well,” he said.

Sablan pointed out that Mariana Resort was one of the first major foreign investor to decide to do business here and has continued to do so for over 35 years.

“DPL’s position is that we have to go through RFP but a couple of years ago they sent a letter to Mariana Resort, encouraging them to submit their plans for a new lease so that they can continue to do business. But then we get a complete change in policy.”

He said it doesn’t make sense for the government to seek to attract investors here “and then turn around and try to get rid of one that is already here,” while in the process welcoming another investor.

“We can have both. We can keep the ones we’ve had here and welcome new investors. I think with proper assessment we can accommodate new investors without sacrificing those that have been long term and loyal business partners,” Sablan said.