In a formal letter to the Department of Public Lands, Kan Pacific Saipan president Yoshihiro Kitami rejected DPL Secretary Pete A. Tenorio\u2019s decision to solicit competitive bids on Mariana Resort & Spa\u2019s expiring public land lease.<\/p>\n
Kitami revealed in his letter that DPL was contractually obligated to give notice of intent to transition the subject land that Kan Pacific has to DPL five years \u201cbefore the expiration of the lease\u201d in accordance with Paragraph 2(a) of the Fourth Amendment to the Lease Agreement entered in March 2003 between Kan Pacific and DPL\u2019s predecessor, Marianas Public Lands Authority.<\/p>\n
Paragraph 3(a) for \u201cprovision for transition\u201d states that \u201cat least five years before the expiration of the lease Extension Term, the Lessor shall inform the Lessee whether it intends to initiate the transition of the management of the facilities to Lessor.\u201d<\/p>\n
Kan Pacific\u2019s lease expiration date is April 30, 2018. Instead of informing Kan Pacific of an intention to do a transition of the property back to the DPL, DPL informed Kan Pacific that it was the intention of the DPL to grant another lease.<\/p>\n
Kitami stated in his letter that in May 2013, DPL expressed a desire to grant an additional lease term and encouraged the company to continue investing in the leasehold beyond the termination date.<\/p>\n
DPL also sent a letter in May 29, 2013, advising that a\u201cplan was being developed for advance approval of lease extensions by the Legislature and the Governor\u2019s Office and also mentioned the existence of an effort to amend Article 11 of the CNMI Constitution to increase the limits of lease terms to 99 years.<\/p>\n
\u201cIt is undeniable that, at the time at which the DPL was required to give notice of any intention to transition the land from Kan Pacific back to the DPL, the DPL indicated to Kan Pacific that it was not intending to transition the land back to the DPL and, instead, informed Kan Pacific that it was the intention of the DPL to enter into another lease with Kan Pacific. The DPL actually encouraged Kan Pacific to move forward accordingly\u2014and we did,\u201d Kitami stated.<\/p>\n
Kan Pacific took no steps to disengage from the enterprise at Marianas Resort and no steps to ease up on investing efforts and expenditures on the property and made no budgetary adjustments to facilitate any transition out for the facilities.<\/p>\n
Instead, counsels for DPL and Kan Pacific had a discussion regarding preparation for a lease agreement.<\/p>\n
On Feb. 2014, DPL\u2019s counsel and Kan Pacific\u2019s counsel communicated about forms that could be used for the lease, and DPL\u2019s counsel actually sent lease agreement forms for consideration, while Kan Pacific proposed lease form to DPL\u2019s counsel as well.<\/p>\n
Kitami added that DPL\u2019s counsel\u2019s email sent to Kan Pacific on June 2014 stated \u201cIn general, DPL is hoping Kan Pacific will invest in improvements to the property as soon as possible, which is why DPL offered to enter into a new lease before the natural expiration of the current lease. Correct me if I\u2019m wrong, but it seems that waiting until the old lease expires before entering a new lease would mean that Kan Pacific would postpone making any real investment in improvements until sometime after 2018.\u201d<\/p>\n
The email adds \u201cThe DPL secretary also indicated that, to be safe, DPL may consider doing an RFP for the property if there is no concrete agreement in effect between DPL and Kan Pacific as we head into the last years of the current lease. So, it seems DPL\u2019s preference is to enter into a new lease as soon as possible so that Kan Pacific will invest more money into the property as soon as possible.\u201d<\/p>\n
The Kan Pacific president said DPL requested a lease proposal entering into a lease with Kan Pacific. Kan Pacific provided an initial proposal on or about Aug. 4, 2014. It included a plan for $30 million in additions, renovations, and improvements. Kitami said Kan Pacific submitted an amended proposal that included a plan for $75 million. He said the proposal is still pending with DPL.<\/p>\n
On May 22, 2015 Kan Pacific provided DPL with a legal memorandum upon its request.<\/p>\n
\u201cKan Pacific has been a good, reliable, trustworthy, honorable tenant for the past 37 years\u2026Kan Pacific has earned the right to stay in business at the location that it has developed and sacrificed for\u2026and it would be unfair to place Kan Pacific on par with any newcomer that might come along with a little more capital and some lofty promises\u2026We are not saying we should be granted another lease\u2026we are saying that we have been good, reliable, and productive tenant and we have worked hard and sacrificed to make that so,\u201d Kitami said.<\/p>\n
If awarded a lease extension, Kitami said Kan Pacific is poised to immediately enter into a lease agreement and commence a $75-million improvement project that would \u201csubstantially improve the property, greatly enhance its value, increase rental and tax income for the CNMI, and create a considerable amount of new jobs.\u201d <\/p>\n","protected":false},"excerpt":{"rendered":"
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