Wednesday, February 20, 2017

DPL says competitive bidding now rule for expiring leases

The Department of Public Lands will solicit proposals for public lands upon expiration of existing leases in the CNMI.

DPL Secretary Pedro A. Tenorio in a letter said “after considering all options, it is the position of this department that the best interest of the collective owners of public land are best served by conducting a global solicitation for proposals for the public land upon expiration of existing leases.”

Tenorio added, “this will be the rule for any expiring leases with our government.”

Tenorio’s letter was addressed to Yoshihiro Kitami, president of Mariana Resort & Spa, a copy of which was provided to media.

The resort’s long-term lease with the government is set to expire in about two years.

“Consistent with our fiduciary duty, we will solicit proposals, and award leases based on competitive proposals received and evaluated by the Department of Public Lands and appropriate CNMI government agencies as proposing the highest value to DPL,” Tenorio also said.

He also said he believes “the governor concurs with this position.”

Tenorio said the DPL will be preparing a comprehensive “scope of work” and “instructions to proposers to use as its guide in requesting interested firms to submit proposals in the near future, well ahead of expiration of your lease.”

“In due time, DPL will officially announce this request for proposal in a number of local and global newspapers and other publications as appropriate. You will be invited to participate and compete for a new lease as the time comes,” he said.

Next move

“We are not happy,” Gloria Cavanagh, Mariana Resort & Spa general manager said, after confirming that they indeed got the DPL letter.

In an interview, she said she is set to hold discussions with the company’s legal counsel before drafting an official response.

She said discussions will also be held immediately with other resort executives, some of whom are currently off-island.

Cavanagh, who is also the chair of the Hotel Association of the Northern Mariana Islands, said the resort will then take a position and answer the DPL letter.

Press Secretary Ivan Blanco, meanwhile, confirmed that the DPL secretary and Gov. Eloy S. Inos “have been discussing” the leases for quite some time now.

“There were discussion between the DPL, the governor, and the HANMI’s legal counsel,” Blanco said, adding that the HANMI’s legal counsel have yet to inform the governor of what their position is on the leases.

Alternatives

Back in March, Tenorio recommended “alternative” leasing agreements with hotels with expiring public land leases.

One possibility is to allow the hotels to get an extension on a portion of the public land that they are leasing now. However, this alternative agreement will entail legislative approval.

Another alternative leasing agreement Tenorio suggested is to allow the hotels to terminate their respective leases and apply for another long-term lease. But again, these alternatives will need support of the Legislature.

The leases of Mariana Resort and Spa, Fiesta Resort and Spa Saipan, Hyatt Regency Saipan, Pacific Islands Club Saipan, and Kanoa Resort are close to expiring.

Mariana Resort’s public land lease expires on April 30, 2018, but it is pursuing a new lease with a commitment of some $30 million in added investment.

HANMI earlier said some of its members are holding back on making future investments on their hotels if they cannot get any assurances that their land lease agreements will be extended.

Without such an assurance, hotels whose public land leases are close to expiration say the uncertainty is putting a damper on their plans to improve amenities and raise hotel standards, HANMI said.

Source: Saipantribune

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