SAIPAN CASINO DEAL REACHED

A whopping $3.14 billion Saipan casino agreement between the Commonwealth Lottery Commission and Best Sunshine’s parent company Imperial Pacific International has been reached—the single largest development deal in recent CNMI history. This comes barely five months since the signing of a controversial gambling law that had already been amended twice and remains a subject of lawsuits.

The maximum 40-year deal was reached on Tuesday night.

This was confirmed by Imperial Pacific’s announcement on the Hong Kong Stock Exchange website and Lottery Commission chair Sixto Igisomar in a brief phone interview yesterday.

A signing “ceremony” may be held in the next few days.

Gov. Eloy S. Inos said the agreement provides an economic future for the CNMI people.

At the same time, he said the CNMI needs to be cautious in its implementation “so as to protect our environment and island culture.”

A $30-million deposit would soon be released from escrow, which will pave the way for the payment—in the next few days—of CNMI retirees’ deferred 25-percent pension since last year and the payment of interest on defined benefit plan members’ withdrawn contributions.

The agreement grants Imperial Pacific an exclusive license to develop an integrated casino resort on Saipan.

Questions as to where the hotels and casinos will be located on Saipan have yet to be answered, along with studies showing how Saipan’s roads, airports, power and water sources, workforce and other amenities will be impacted during the duration of the integrated resort construction and operation.

Imperial Pacific, in its announcement, said they are “actively looking for quality land on the island of Saipan” for the integrated resort.

Trading in the shares was halted for four hours yesterday starting at 9am at Imperial Pacific’s request filed with the Hong Kong Stock Exchange.

Terms

A statement from the Lottery Commission yesterday, issued by acting press secretary Ivan Blanco, says that the terms of the license agreement cover 12 items that Imperial Pacific has to build within eight years, or by 2022.

These include 2,229 hotel guest rooms, 17,000 square meters of total gaming floor area, and $100-million themed entertainment facility.

Other requirements include at least 23 food and beverage outlets in 13,532 square meters of space, 15,000 square meters of retail space, a 600-seat theatre, 9,094 square meters of meeting space including ballroom, a wedding chapel, 200 villas, 1,050 square meters of fitness area and 1,900-square-meter spa facility.

Imperial Pacific estimates that the total cost of these requirements is $3.14 billion, way beyond the minimum $2 billion investment required by the Saipan casino law.

The four-member Lottery Commission—Commerce Secretary Sixto Igisomar as chairman, Finance Secretary Larrisa Larson, Attorney General-nominee Gilbert Birnbrich, and Public Safety Commissioner James Deleon Guerrero—is scheduled to meet again on Friday. The commission counsel is Jim Stump, who’s been instrumental throughout the process.

Terence Tay, chief operating officer of Best Sunshine, is expected to be back on island later this week. Tay has been the face of Best Sunshine and its parent company, Imperial Pacific, since day one.

Model development

Igisomar, in a statement, said the requirement for construction of an “integrated resort” was modeled after large casino developments such as the Venetian Casino in Las Vegas and Resorts World Sentosa in Singapore.

This concept brings together shopping, gaming, hotel accommodations, housing development, meeting facilities, wedding chapel, spa facilities, restaurants, and family entertainment in an integrated development.

“Critical to this approach is a license requirement for construction of a $100-million entertainment attraction that is a central focus of the resort,” he said.

Preliminary discussions on the type of themed entertainment include water attractions and theatrical productions.

“By integrating these different elements, you have much more than just a casino, and instead have a multidimensional project. The license agreement includes quality standards for all rooms, guest services, and shopping,” Igisomar said.

Complex negotiations

Igisomar said these were “complex” negotiations as the license is a long-term agreement that will have “far-reaching impact on our island community.”

“The negotiations were not simple and there was significant give and take between the parties, but overall, the Commission was pleased with the outcome. I want to personally thank Commission members Finance Secretary Larson, Commissioner Deleon Guerrero, and acting attorney general Birnbrich for the time and effort they committed to this process,” Igisomar said.

The commission chairman said in order to ensure that the CNMI receives the most benefit from the agreement, it increased the requirements for development and required an “expedited implementation plan.”

Under that plan, Imperial Pacific is required to develop an initial gaming facility consisting of a 5-star, 225-room hotel within 24 months.

Phase one of the improvements is required within 36 months.

These include an 800-room luxury hotel, a $100-million themed entertainment facility with amphitheater, 5,732 square meters of food and beverage outlets, 2,500 square meters of meeting space, 5,000 square meters of retail shops, a wedding chapel, 500 sqm of spa/fitness area, 10,000 square meters of gaming area, and associated parking, site improvements, landscaping, furnishing, fixtures, utilities and infrastructure.

Other commissioners

Birnbrich, as the CNMI’s acting attorney general, said the license agreement is complex.

He said the agreement had to incorporate concepts of licensing, contracts, development requirements, statutory authority and the dual authority of the Lottery Commission and the yet to be established Casino Commission.

“The combination of these elements resulted in a lengthy agreement,” Birnbrich said. “We were careful to separate development requirements, which will be under the authority of the Executive Branch, and oversight of gaming, which will be under the authority of the Casino Commission.”

He said these two agencies have coordinated authority for license oversight and enforcement, “either of which can suspend or revoke the license for a material breach in conformity with the requirements of the Commonwealth Administrative Procedure Act.”

Deleon Guerrero, the CNMI’s public safety commissioner, said in a statement that he wants to “assure the public that the foremost issue being considered by the commission was to protect the public interest.”

“As DPS vommissioner, I wanted to ensure that the selection process met high standards of transparency and integrity. We approached the entire process of negotiating a license agreement that would be in the best interest of the people. The Northern Mariana Islands are my home and I realize that the decisions we would be making would have long term effects on our families and I want to protect and represent these interests,” he said.

Retirement, DB issues

Larson, as Finance secretary, addressed the restoration of deferred pension checks, among other things.

“We are moving forward in an expeditious manner to transfer the $30-million licensee deposit, but this will take several steps,” she said.

Once the funds are received, processing of payments begins.

“This is a complex process that must be done carefully, so we ask for the public’s patience in this matter but rest assured we recognize the need to move quickly,” she added.

The governor, who is seeking election on Nov. 4, expressed relief that the negotiations were finally concluded.

He said the agreement will have a significant impact on the entire community.

“It will provide the funding necessary to pay interest to employees who withdrew their pension contributions and restore 25-percent reduction to retirees which was one of my primary objectives. However, just as important is that it provides a long-term boost to our economy that will result in the increase in wages, rental rates, property values, and use of local goods and services,” he said.

Inos also stressed that the agreement provides an economic future for the CNMI people, ensuring good-paying jobs, and provides an incentive for families to remain in the Commonwealth.

He said these last few years, he has witnessed the dispersal of many families who left the islands because of lack of opportunities and he is hoping that this will reverse that trend and provide an incentive to those who left to return.

“One of the key elements of our culture is our strong family bonds and we need to preserve and protect this element,” he said.

The governor also said that although he is happy with the license agreement’s signing, the CNMI needs to be cautious in its implementation to protect the environment and island culture.

“I am happy that the Lottery Commission specifically identified this issue as an important duty of the licensee. We must work together with the Bureau of Environmental and Coastal Quality and the Zoning Office to ensure that the development balances environment issues with the need for economic development. These two elements can be in harmony, but it takes careful consideration by both the developer and government agencies,” he added.

Sen. Pete Reyes (Ind-Saipan) said yesterday that the casino agreement “will mean considerable economic opportunity for the CNMI.”