Members of the House of Representatives fiscal committee and the Department of Public Lands want Gov. Ralph DLG Torres to approve a “carryover” of over $800,000 in previous fiscal year funds to finance homestead infrastructure projects that have been on standby on Rota, Tinian, and Saipan.
DPL, in a budget hearing held by House fiscal chair Rep. Antonio Sablan (Ind-Saipan) and committee members, discussed the request of $893,000 for carryover funds from fiscal year 2015 to FY 2016 yesterday morning.
DPL Secretary Marianne Teregeyo told lawmakers that they could not approve the funds until the governor “identified” them in a revenue submission to the Legislature.
“We’ve had several discussions all in favor,” she told lawmakers on previous meetings with Torres on the issue. “We’ve talked about it several times…he was alluding that it would be submitted.”
Rep. Angel Demapan (R-Saipan) said it was “disturbing” that at this point in the budget process that funds would “sit idle somewhere” without appropriation.
“We are so close to the appropriation process,” without a supplemental budget identifying these resources, he said, referring to ongoing fiscal budget deliberations and action on a budget before the end of the fiscal year in September.
“I hate to see the projects become stalled for another year because of lack of funding,” Demapan said.
He urged DPL to reach out to the governor to see if he could identify revenues between now and next week for the projects.
In a March 23 letter to the governor, Teregeyo said DPL had reassessed its budgetary needs for FY 2016 and determined a need to request to carryover budget appropriations from last fiscal year into this one.
She notes that DPL had originally intended on submitting a timely request to Torres by October 2015. However, this was not possible due to the recovery phase after Typhoon Soudelor which pushed back some of DPL’s processes, she added.
Public Law 15-02 mandates DPL to hold sums required “for approved homesteads or other department programs in the next two fiscal year,” she wrote.
“I certify that this carryover request will not cause DPL to exceed this threshold,” Teregeyo wrote in the letter.
The total of $893,000 in carryover funds is divided into $100,000 for Homestead Finafa on Rota, $556,000 for Homestead Marpo Heights on Tinian, $200,000 for Homestead As Gonno on Saipan, and $37,000 for a DPL Compliance division vehicle.
“…I consider these important to keep DPL’s progress ongoing,” Teregeyo said.
Sablan wants clarity on Mariana Resort issue
Fiscal chair Sablan and other lawmakers yesterday also sought clarity from DPL on the reported agreement between the Saipan casino, Imperial Pacific International, and Kan Pacific Saipan Ltd., on transitioning Kan Pacific’s lease of the Mariana Resort and Spa property in Marpi to the casino company.
IPI last week was issued an “intent to award” from DPL for an open bid for a new lease for these lands. They had earlier announced an agreement between the two companies to transition the lease to the casino, which DPL had argued in court as collusive, forcing a settlement of which DPL said they got $1 million from.
Sablan asked Teregeyo yesterday if the Kan Pacific/IPI agreement remains “valid.”
“…Is that agreement still being honored?” Sablan said.
Teregeyo said she believes it was still honored by both parties but noted DPL is not a party to the agreement. “We didn’t sign off on it. Henceforth the lawsuit,” she said.
The reported deal would allow Kan Pacific to assign its remaining lease to IPI and that they would continue to operate the Mariana Resort & Spa “for at least a year.” Kan Pacific’s 40-year lease ends in April 2018.
Sablan asked that because two years were left on the lease, if operations were going to shutdown during the remaining last year.
“…There are a whole lot of resident workers currently employed down there and we don’t want these people to find out on the 11th hour that they don’t have a job,” Sablan said.
Teregeyo responded by saying that Kan Pacific would continue to operate to the end of the lease, that they were not privy to the casino agreement, could not speak to all employees, but that payments were being paid and Kan Pacific “will operate all the way until the end of the day.”
“That’s what we need to hear,” Sablan said. “The only agreement between DPL and Kan Pacific is the one that you guys have. Under that lease agreement Kan Pacific is obligated to comply and meet the conditions of that current lease which means operating the hotel and I surely hope that will be the case…that Kan Pacific continues its business operations until the last year…under the current lease.”
He said this is to ensure that the no one is surprised on the 11th hour that they are shutting down operations. “We hear this from employees out there that they are being told that they are being shut down.”
Sablan asked that DPL “verify” this agreement and “what exactly is going to happen on the remaining two years” and if there is any intention to shut down operations a year in advance of expiration.
Managaha vs Mariana Resort
Lawmakers also questioned DPL’s plans for the concessions lease for Managaha Island, for which the concession agreement with Tasi Tours expires in August.
Gov. Ralph DLG Torres has stressed his desire to re-negotiate a lease with the Japanese company and has indicated a competitive bid process is not needed since the concessions agreement does not statutorily require a RFP.
On this issue, Teregeyo stressed that her and her legal counsel were looking at the “legalities” and “haven’t reached a conclusion” so far on the direction of the concession agreement, when asked by lawmakers.
She noted that the existing concession agreement is not a lease and would expire next month and would go into “holdover”—for which DPL charges 150 percent of current case—if an agreement were not reached.
“Managaha has been treated as a concession agreement since the beginning,” Teregeyo said during her discussion with lawmakers.
Sablan said he sincerely hopes that because DPL had come out with the statement and policy for a need for RFPs to maximize the returns on public lands, that they follow the same justification for Managaha concessions.
Renegotiating the concessions agreement over putting it out for bid would forgo the chance for other competitive offers, the kind of competitive bids that former DPL secretary Pete A. Tenorio touted when he announced last year that DPL would seek an RFP for the Kan Pacific property over a re-negotiated lease, much to the dismay and outrage of the hotel owners.
“We expect robust competition for a parcel of this magnitude,” Tenorio said in a Nov. 2 , 2015 letter to Saipan Tribune last year.
The Saipan casino was the only bid for the award, according to Teregeyo this week.
“I hope that same justification is used for the Managaha issue,” Sablan went on to say. “We cannot be talking apples and oranges on the same issue. We have to be consistent on how we put forth policy.” Not only for Managaha, he said, but also for upcoming leases for major hotels due to expire in the next few years.
Teregeyo responded by saying she agreed with Sablan and for Managaha, they would be tasked with “getting the highest value.”
“However, Managaha and Kan Pacific are two different agreements,” she said, noting that the Managaha agreement is treated similar to beach side or road vendors they negotiate with. “Kan Pacific is a lease,” she went on to say. “Those are the legalities we are working on.”
She stressed that in reviewing the existing concessions agreement that there were “a lot of things” they would like to “remove” if the concessions agreement were negotiated.
Sablan agreed the two agreements were different but the “commonality is public land resources. The RFP was to maximize returns on public land resources under DPL’s care… I hope that we keep that in mind when we negotiate with Managaha.”