DPL backs new lease for Coral Ocean Resort

The Department of Public Lands supports granting a new land lease to Suwaso Corp. to allow its Coral Ocean Resort’s operation to continue for another 40 years, with an investment of over $30 million.

Under the proposal, Suwaso Corp. will be granted an additional 15-year lease extension if the initial lease is granted by DPL and approved by the Legislature.

DPL Secretary Teresita A. Santos submitted to legislative officers last March 11 a packet of documents for the Legislature’s review and consideration of Suwaso’s request to renew its land lease. The Legislature received the packet on Tuesday.

Suwaso was initially granted a 25-year land lease last Feb. 10, 1986, with an option to extend it for 15 years, for a total of 40 years. After the initial lease expired in 2011, the company opted to avail of its 15-year extension. It is currently on its 38th year. The 15-year extension will expire in 2026.

Santos said Suwaso has sustained a good relationship with DPL. As their records show, the lessee has been compliant with the provisions of the lease and has kept its account current, she added.

In terms of the benefits that will accrue the CNMI if it renews the lease, Santos said finding a new lessee during this recession is difficult and not guaranteed. She said the amount of time and money DPL will need to invest in the process for a request for proposal, to review and evaluate, and to conduct the final negotiation with a new lessee is extremely time-consuming and will not guarantee an executed lease in a timely manner.

The DPL secretary said the process may drag, incurring more expenses for DPL in terms of lost income and additional operational expenses to maintain and secure the premises.

Santos said DPL’s support for the renewal was subject to the Suwaso’s full compliance with its current lease for lands in Unai Dangkulu containing a total area of 581,585 square meters.

Under the proposed new lease, Suwaso will pay an annual rate of 0.6% of the fair market value for the first 10 years and that will increase to 1.125% for the remaining term of the lease.

In addition, the lessee will pay a percentage of its business gross receipts and contribute over $1.8 million in public benefits. The public benefits include $600,000 for environmental improvements; $300,000 for beautification projects; $5,000 in annual student education assistance; $10,000 in annual promotion of local cultures; and $300,000 for playground equipment.

Under the environmental improvement projects, Suwaso will install streetlights and a new asphalt road for Agingan Beach, As Gonno Road, and Isley Field.

The company will also continue maintaining the Agingan Beach pavilions and restroom.

Suwaso also promises to provide financial assistance for eligible Northern Marianas Descent students.

The company also pledges to give $5,000 each year to the Indigenous Affairs Office and Carolinian Affairs Office to support activities to promote the Chamorro and Carolinian cultures, language, and arts.

Suwaso also pledges to buy, install, and maintain a new children’s park.

Santos said a total of $25 million will be invested by Suwaso for renovations of existing structures and new improvements on the Coral Ocean Resort premises. Santos said Suwaso plans to further repair and renovate existing buildings damaged by past super typhoons. She said new improvements include the construction of 200 rooms and villas, the Spanish Garden, a Golf Starter Building, Beach Club, New Restaurant, and an upgraded swimming pool.

A public notice of the proposed lease was issued in local newspapers eight times within a 15-day period for the community to submit comments to support or oppose the new lease. Santos said the comment period closed on Feb. 12, 2024, and one comment was submitted opposing the lease.

She said DPL also held public hearings on Saipan, Tinian, and Rota, and six community members testified in support of Suwaso’s new lease.

Santos pointed out that if DPL seeks a new investor, the properties will sit vacant with no income generation and the longer the property remains vacant, DPL will shoulder the expenses of maintaining and securing the property.

At present, the monthly expenses incurred by DPL for basic maintenance and security at the former Mariana Resort property is a minimum of $24,000, she said. This amount is significant and DPL cannot afford to incur expenses for properties that do not generate income, she added.

She said DPL and Suwaso’s intent are to avoid closure of operation, to continue its lease and rental payments, and invest more on the property, thereby sustaining revenue to DPL, Suwaso, and the CNMI.

Santos said DPL will incur costs associated with the turnover of properties, like what they are experiencing with the former Mariana Resort properties.

With Suwaso’s continuous maintenance and utilization of the property, and with its intent to renew its lease for another 40 years with an investment over $30 million, it speaks high volume of the company’s desire and dedication to continue its lease with DPL and to remain a part of the CNMI, she said.