DLNR, MRC urged to amend Marina deal

The Department of Lands and Natural Resources should either amend its leasing agreement with Marine Revitalization Corporation in the operation of the Outer Cove Marina or find another company to manage it.

These were the recommendations made by the Office of Public Auditor on the DLNR-MRC agreement for operating the Outer Cove Marina covering the period May 1993 to October 1998.

The audit revealed that both parties failed to comply with most of the terms of their lease agreement. For instance, the report cited, the department failed to prevent boats from being moored at the Smiling Cove Marina.

On the case of MRC, the audit said, of the 76 boat slips MRC promised to build at the Outer Cove Marina, only a total of 45 were actually constructed.

The OPA also was unable to determine whether the $3,590,857 the MRC said it spent in building the Outer Cove Marina was actually the amount incurred in constructing the project.

Moreover, OPA also found out that both DLNR and MRC failed to clarify terms of the lease agreement as it: (a) does not specify a basis the lessee can use to establish mooring fees. (b) contains no language that would ensure a minimum level of revenue from MRC, and (c) does not specify: (i) a fixed project cost ceiling, (ii) how project costs are to be allocated to facilities and infrastructure, or (iii) a limit on fees that MRC can collect.

OPA also submitted recommendations to the DLNR if it does decide to choose the first alternative, which is to amend or change the leasing agreement with the MRC.

It said that DLNR should clarify the obligations and responsibilities of both parties in matters such as the actual Outer Cove Marina cost and allocation of project cost between the area covered by the lease and the area covered by the concession contract.

OPA also suggested clarification on provisions on the lease agreement that may no longer be practical to implement, such as basing the computation of the CNMI’s lease revenue on a percentage of MRC’s net earnings.

Other recommendations made by the OPA involved an agreement or understanding between the DLNR and MRC with regards to fees collected from boat owners.

It also suggested that the OPA and MRC dissolve other supplemental agreement.

Public Auditor Michael Sablan said the OPA has transmitted the audit report to the DLNR. The department is said to be waiting for either a report from the Senate Oversight Committee or the enactment of House Bill 12-250 before it could take action.