Lease extension for LaoLao Bay Golf Course OK’d

Lawmakers yesterday voted unanimously to grant up to 40 years lease on 200 hectares of public lands being occupied by the LaoLao Bay Golf Resort in Kagman to pave the way for expansion plans.

Top executives of Saipan Laulau Development, Inc., owner of the resort, hailed as timely and wise move the 15-year extension to the original lease agreement, noting it would help them secure bank loans to carry out upgrade of existing facilities.

With two championship 18-hole golf courses and first-class resort facilities, it is considered among the top golf destinations in the Pacific, according to Rep. Dino M. Jones, chair of the House Natural Resources Committee, who authored the resolution adopted at yesterday’s House-Senate joint session.

Twenty-six legislators, except for Rep. Thomas B. Pangelinan who was absent, approved the resolution, exceeding the required three-fourth votes or 21 members of the 27-seat Legislature.

Good

“It’s very good because in this situation, it’s very difficult to explain how to repay our bank loans,” said Takahisa Oguma, SLDI president and general manager.

The company now can borrow money, provide expansion and keep the gold courses top class, according to former Lt. Gov. Pete A. Tenorio, one of the company executives who attended the one-hour session.

At the same time, he underscored the significance of the legislative move in CNMI’s efforts to attract new investments, citing the economic difficulties that continue to confront the islands.

“It shows that members of the Legislature are very concerned about the economic downtrend that we have. They recognize that by granting… the extension sends a [good] signal to investors,” explained Mr. Tenorio.
“It will be good for the Commonwealth.”

The defunct SC Properties (Saipan) forged a 25-year lease agreement with the Marianas Public Land Corporation in 1989 to develop the parcel of government lands in Kagman, which was approved a year later by the 7th Legislature.

The 15-year extension was part of the terms under the deal, and SLDI, which took over management, was just exercising this option to enable it to funnel more money for further development of the property.

According to Mr. Tenorio, the resort covers only 160 hectares of the land. “After 40 years, the government will take back the land. It’s not for us to benefit in the long run, it’s the future generation,” he said.

The company did not indicate plans for expansion, but Mr. Tenorio disclosed it may be underway “if the economy gets better.” Mr. Oguma said the resort has yet to tap a larger market in Japan due to lack of airline service between the island and several key Japanese cities, other than Tokyo and Osaka.

Questions

Although lawmakers expressed support to the lease extension, the voting did not come easy for the resort as Rep. Heinz S. Hofschneider questioned legality of several amendments to the original agreement.

In particular, he said the Legislature should have also approved the decision by SLDI and Board of Public Lands, the successor of MPLC, to change the terms regarding contributions to the CNMI.

Under the 1989 deal, the company agreed to share 25 percent of its profits to the government, 10 percent of which would go to the Public School System and another 10 percent to the Retirement Fund.

While five percent were set aside for community contribution, both parties acknowledged that such arrangement was difficult to implement and so they decided to increase share of PSS to 15 percent.

“You can’t act on a 15-year extension if the first 25-year lease is highly suspect,” Mr. Hofschneider told his colleagues. “One of these days, someone can raise that issue. This is an opportunity to do it right.”

The issue was only resolved after the resolution was amended to reflect such a change. Other amendments, including on rates and schedules of fees, were also inserted to further clarify its provisions.

Public lands officials had backed the extension because the additional lease payments may be set aside for capital improvement projects in homestead areas, according to the resolution.

It also provided that the Division of Public Lands is empowered to negotiate with SLDI any fee schedule during the extension period, while the resort is required to undertake landscaping and maintenance of public schools in Kagman near the site.

“It’s only fair that we consider their return of investments so that other potential investors will have confidence to have their money back,” said Mr. Jones.