REPRESENTATIVES Angelo A. Camacho and Julie Marie A. Ogo are seeking clarification from the Department of Public Lands regarding the status of the 40-year land lease contract that Hyatt Regency Saipan signed with the CNMI government nearly three years ago, before it shut down on June 30, 2024.
In October 2021, Saipan Portopia Hotel Corp., the company that operated the hotel, signed a 40-year land lease agreement with the CNMI government. The new land lease contract commenced on Jan. 1, 2022. But Hyatt, “citing global shifts and continued challenges impacting Saipan and its tourism sector,” ceased operations on June 30, 2024, with 38 years left in the lease contract.
Camacho chairs the House Committee on Natural Resources, while Ogo chairs the House Committee on Commerce and Tourism.
They noted that during the budget hearing conducted by the Senate Fiscal Affairs Committee on Aug. 7, 2024, DPL officials stated that Saipan Portopia Hotel Corporation “still holds” the leasehold interest for the property despite the hotel’s closure, because the company has a 40-year lease contract with DPL. It was also indicated in the meeting that Saipan Portopia has made advanced rental payments through December 2024, Camacho and Ogo said.
In their joint letter to DPL Secretary Teresita A. Santos on Aug. 11, 2024, the lawmakers said, “It was our understanding that the DPL-Portopia Lease was expected to terminate on or around August 31, 2024, following the Hyatt’s closure on June 30, 2024.”
Camacho and Ogo said they found out from “discussions with several businesses that, based on the comments made during the hearing, they have expressed interest in acquiring the leasehold, but they claim that they have been discouraged from doing so by DPL with the information that the lease would terminate on or around Aug. 31, 2024. However, based on the testimonies of DPL officials in the budget hearing, it now appears that Saipan Portopia’s lease may expire or terminate in December 2024.”
“Further complicating matters,” Camacho and Ogo said, DPL informed the Senate committee that Saipan Portopia had made advance rental payments through December 2024.
“This revelation has raised questions about the current status of the lease and whether Saipan Portopia may be in default on other lease provisions. In response, DPL indicated that it will consult with legal counsel to address these issues,” the lawmakers said.
They said the lease agreement required Saipan Portopia to notify DPL of its construction plans and submit conceptual drawings and specifications within 12 months of notification. Additionally, Article 10 of the lease agreement required Saipan Portopia to secure all necessary governmental permits for development and construction within 36 months of DPL’s approval of the construction plan.
“These lease terms have sparked concerns among committee members about whether Portopia has met its obligations, particularly since the lease began on January 1, 2022, and Portopia announced it would cease operations on June 30, 2024,” the lawmakers said.
Camacho and Ogo are also “worried” about a recent lease amendment that reduced the restriction period on the sale, transfer, or assignment of the Hyatt lease from five years to two years. This change, they said, “could potentially allow Saipan Portopia to exit its lease obligations sooner than initially planned.”
“The situation is further complicated by discussions with other businesses interested in acquiring the Saipan Portopia lease. These businesses have been informed by DPL that it does not have the authority to recommend an assignment of the lease, as that decision is up to Saipan Portopia,” the lawmakers said.
DPL’s response
In her Aug. 15, 2024, response to the lawmakers’ request for clarification, Santos said it was DPL’s understanding that Saipan Portopia intended to stop operating all equipment and utilities, and cease all activities on the premises on Aug. 31, 2024. However, she said, Saipan Portopia “cannot unilaterally terminate the lease as of this date.”
She said DPL will either need to declare default of the lease once the premises has been abandoned for 90 days, or will need to execute a mutual cancelation agreement with Saipan Portopia to allow DPL to take possession of the premises.
“The former Hyatt Regency Saipan hotel property is encumbered by lease agreement LA22-001S dated Jan. 1, 2022, entered into between the Department of Public Lands and Saipan Portopia Hotel Corp., dba Hyatt Regency Saipan,” Santos said, adding that the term of the lease is for a period of 40 years, and an extension of 15 years may be granted with approval of the Legislature.
