Department of Public Lands Secretary Pete A. Tenorio reneged on commitments made in 2013 to negotiate a new lease for Kan Pacific\u2019s Mariana Resort and Hotel property in Marpi, according to a Kan Pacific document released yesterday. At the same time, the hotel says Open Government Act-requested letters now reveal that Best Sunshine International, Ltd. made specific and expressed requests months after new lease negotiations began to acquire their own lease of the Kan Pacific property in Marpi.<\/p>\n
In June this year, DPL announced its decision to seek competitive bids for the Mariana Resort property, whose current lease expires in 2018.<\/p>\n
The Kan Pacific document\u2014a letter sent to Tenorio yesterday\u2014describes a timeline of events between DPL and Kan Pacific that suffered an \u201capparent interruption,\u201d blamed on Best Sunshine\u2019s aggressive pursuit of public lands to meet construction and project mandates as Saipan\u2019s exclusive casino licensee.<\/p>\n
The letter, from Kan Pacific lawyer Joseph J. Iacopino, cites OGA-obtained letter from Aug. 4, 2014, that showed that Best Sunshine \u201cspecifically requested a lease of the Mariana Resort property.\u201d<\/p>\n
The letter was from Terence Tay of Best Sunshine to Tenorio, according to Iacopino.<\/p>\n
\u201cSince that time, the DPL discontinued efforts to enter into a subsequent lease with Kan Pacific,\u201d Iacopino said.<\/p>\n
He cited another Aug. 22, 2014, letter from Tay to DPL, as follows: \u201cOn August 4, 2014, we submitted our Proposal to Lease Public Lands, more specifically, the public lands in Marpi that are currently being leased by Kan Pacific, Ltd.\u201d<\/p>\n
\u201cGiven mandates of Public Law 18-56 and the casino license agreement, we are left with no choice but to aggressively pursue available lands on Saipan where we can build Phase 1 of the integrated resort,\u201d Tay\u2019s letter stated.<\/p>\n
Saipan Tribune tried but failed to obtain comments from Tenorio yesterday. Calls to his cellphone were not answered.<\/p>\n
Saipan Tribune also contacted Best Sunshine chief operating officer Matt Harkness\u2019 office yesterday, but no comments were provided as of press time.<\/p>\n
It\u2019s unclear right now if draft lease agreements were ever entertained between DPL and Best Sunshine for the Marpi property, or if a monetary offer was ever made. This was posed in an email to Harkness\u2019 office yesterday.<\/p>\n
For their part, Kan Pacific submitted proposals with up to $75 million in added investments for a 25-year lease, while lease negotiations were ongoing, according to emails cited in Iacopino\u2019s letter.<\/p>\n
Failure to issue notice<\/strong><\/p>\n Iacopino was responding to a letter from Tenorio to Kan Pacific on Monday, which claimed that DPL was constitutionally prohibited from entering into a new lease with Mariana Resort until after their current 40-year lease expires in 2018.<\/p>\n But Iacopino argues that the property will not automatically revert to the government.<\/p>\n \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 Iacopino writes, quoting a provision of the DPL\/Kan Pacific lease agreement.<\/p>\n This provision amendment was made in March 2003 between DPL\u2019s predecessor, the Marianas Public Land Authority, and Kan Pacific.<\/p>\n \u201cDPL was contractually obligated to give notice of intent,\u201d Iacopino said. \u201cHowever, such notice was not given, the deadline passed and, instead of giving such notice, DPL encouraged Kan Pacific to enter into subsequent lease with another 40-year term.\u201d<\/p>\n Iacopino said in the absence of this notice, DPL is in no position to issue bids for the resort property. Such a bid would constitute a \u201cbreach\u201d of the lease agreement by the government, he said.<\/p>\n Not good business practice<\/strong><\/p>\n Iacopino also responded to Tenorio\u2019s claim that the CNMI Constitution requires the reversion of \u201call lands and improvements to the government\u201d before negotiating a second lease.<\/p>\n \u201cThis source of this quoted language is not specified in your letter but it is clear that it is not taken from the CNMI Constitution or from any applicable CNMI statute,\u201d Iacopino said.<\/p>\n This policy would be \u201cneither practical, nor logical and would be quite inconsistent with the actions already taken by DPL.\u201d<\/p>\n \u201cWaiting until the expiration of a lease to commence negotiations would not be practical or logical because it would necessarily result in too much uncertainty about the future of a property,\u201d Iacopino said. This would have \u201cundesirable potential of creating a gap between\u201d the current tenant and the next, which would result in loss of rents and taxes, he said.<\/p>\n \u201cIn regard to the Mariana Resort property, the DPL has already clearly demonstrated that there is no need to wait until the expiration of a lease to start negotiations. The DPL actually started negotiations as of May 2013.\u201d<\/p>\n His letter describes the following timeline of letters and meetings:<\/p>\n On May 16, 2013, Tenorio writes a letter titled \u201cSoliciting Expression of Interest to Extend Current Leasehold on Public Land where Your Hotel is Located.\u201d The letter sought the extension of hotel leases for up to 25 to 40 years \u201cinstead of turning in your leasehold to the CNMI government upon its expiration,\u201d Tenorio writes.<\/p>\n \u201cThe DPL is offering hotel owners an opportunity for extension of their leases,\u201d Tenorio said.<\/p>\n On May 20, 2013, Kan Pacific president Yoshihiro Kitami writes backs in the affirmative, advising that they wish to continue their services as Mariana Resort and Spa. Hotel general manager Gloria Cavanagh also responds affirmatively.<\/p>\n On May 29, 2013, Tenorio thanks Kan Pacific for their response to \u201cDPL\u2019s plan to offer advance approval\u201d of leases nearing their expiration date.<\/p>\n In January 2014, Kan Pacific officials meet with DPL to discuss plans for the subsequent lease, and DPL requests for formal notice for a termination of the existing lease in exchange for a 25-year lease.<\/p>\n On Jan. 21, 2014, Kitami gives the formal notice in a letter to Tenorio to terminate the current lease \u201cin exchange for a new 25-year lease to the same land area.\u201d<\/p>\n On Jan. 28, 2014, Tenorio acknowledges the letter and advises Kan Pacific to begin talks \u201cleading toward a new lease agreement.\u201d<\/p>\n On June 10, 2014, Kan Pacific sends an email to DPL with a first draft of the lease agreement.<\/p>\n On June 11, 2014, DPL replies to the email, stating their hope that Kan Pacific will invest in improvements \u201cas soon as possible, which is why DPL offered to enter a new lease\u2026\u201d<\/p>\n On or about Aug. 4, 2014, Kan Pacific submits an initial proposal for $30 million in added investment, as a response. Kan Pacific also later submitted an amended proposal for $75 million.<\/p>\n Best Sunshine was awarded its exclusive casino license in July 2014. Tay\u2019s letter followed in August.<\/p>\n","protected":false},"excerpt":{"rendered":" Department of Public Lands Secretary Pete A. 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