La Fiesta takeover can lead to more belt-tightening

More cost-cutting measures loom ahead of the Commonwealth’s Executive Branch, as the Governor’s Office is poised to take over the operation of the La Fiesta shopping complex.

Press secretary Peter Callaghan said the governor fully supports the proposal by the Northern Marianas College to transfer ownership of La Fiesta and have the Executive Branch assume management of the facility.

Callaghan maintained that the Governor’s Office has the money to run La Fiesta, but also said that budget cuts are in order for the Executive Branch.

NMC finance officer Raaj Kurapati said earlier that the mall’s operational expenses average $120,000 a month. But according to Callaghan, the net cost is only $30,000 monthly after tenants pay their rent.

“Obviously, the Governor’s Office has the money or they wouldn’t be making the offer,” the press secretary said. “[Operation of La Fiesta] will probably result in a combination of cutting down budgets within the Executive Branch, as well as money that was earmarked for other things that could be used to offset the $30,000 a month.”

Gov. Juan N. Babauta and Northern Marianas College officials were scheduled to sign yesterday a memorandum of agreement for the transfer of responsibility of La Fiesta. But the signing did not materialized.

The agreement was still under legal review, Callaghan said. He added that the mall’s owners—Hotel Nikko Saipan and Coco’s Lagoon Development Corp.—have yet to concur with the planned transfer. “I don’t think they have a problem with [who pays them], as long as they get paid,” he said.

Callaghan noted that the governor’s taking over La Fiesta was a necessary step in order to help NMC keep its accreditation. The Western Association of Schools and Colleges, which has placed the college’s accreditation on warning status, has expressed concern about NMC’s financial status including the cost of operating La Fiesta.

“What the governor has done is he’s given the [NMC Board of Regents] as part of this agreement the opportunity to take a long look at the options for La Fiesta without having to worry about the monetary stuff, and come back to him at a future date and show him a plan for the use of La Fiesta,” Callaghan said.

A provision of the draft agreement states that the governor will lease the facility back to NMC for a dollar a year, once the college comes up with a plan to utilize the mall.

No short-term plan has been made for the use of facility for the meantime.

Babauta is not deviating from his long-term plan to use La Fiesta as an educational facility that is part of NMC, Callaghan added.

“The overall Pacific Gateway Project is still a good plan. It’s still a viable way for us to bring additional revenues into the CNMI, and [to develop] education as an industry. I don’t think the governor is going to let a few, short-term bumps make him deviate from his dream of turning La Fiesta into a beautiful college,” he said.

At the business conference organized by the U.S. Department of the Interior this month, Babauta will be meeting with an investor who has committed to building a dormitory at La Fiesta.

Callaghan refused to give specific details pending the closure of the deal. “But the commitment is there 100 percent. And we should have some news on that within the next couple of weeks,” he said.