MARIANA E-Land Corporation, owner and operator of Kensington Hotel Saipan, Coral Ocean Point, and Pacific Islands Club, has filed a lawsuit against the Department of Public Lands and DPL acting Secretary Sixto K. Igisomar, in his official capacity, for the cancelation of the Mariana Resort property lease agreement.
E-Land also wants the Superior Court to issue a temporary restraining order and a preliminary injunction pursuant to Rule 65(a) of the NMI Rules of Civil Procedure, preventing DPL and/or the acting secretary from reissuing RFP20-RED004 until such time that the court has ruled on E-Land’s complaint.
E-Land, represented by attorney Charity Hodson, stated that “a temporary restraining order is time-sensitive and necessary because DPL and/or the DPL secretary intends to reissue the RFP by July 19.”
E-Land seeks a declaratory judgment declaring as improper DPL’s rescission of the notice of award dated March 22, 2021 as well as DPL’s April 29, 2021 letter with the draft lease attached (referenced RD21-0157), and the cancellation of RFP20-RED004. This should be reversed, the lawsuit added.
Moreover, the lawsuit stated, the court should issue judgment against the DPL secretary for breach of his fiduciary duty; and an injunction to prevent the defendants from reissuing the RFP.
On Feb. 20, 2020, the lawsuit stated, DPL solicited proposals for the purpose of leasing and commercial development of public land — the former Mariana Resort property — in Marpi, through RFP20-RED004.
DPL also released a document titled “Department of Public Lands Response to Questions Regarding RFP20-RED004 Lease and Development of Public Lands in Marpi, Saipan.”
In that document, DPL stated that basic rent “shall be based on the value of the fee simple title to the property. It is the policy of DPL to collect at least 5% of a property’s value each for the term as base rent. No, you will not be disqualified for offering less than 5%; however, DPL will select the most desirable, beneficial, and in the best interest of the Commonwealth and public land beneficiaries.”
On Oct. 12, 2020, E-Land submitted a proposal.
On Feb. 17, 2021, the then-DPL secretary and legal counsel met with E-Land to discuss the amount of the total investment in E-Land’s proposal.
E-Land said it gave a presentation and showed DPL that although the initial rent fee proposed in E-Land’s proposal was 1% of the fair market value plus 2% of operating revenue, the rent proposed was actually greater than the rate of 5% fair market value and 1% of gross revenue.
DPL then requested E-Land to present a best and final offer.
On Feb. 19, 2021, E-Land submitted its best and final offer to DPL.
E-Land said its proposed total investment was $220 million, of which $213.2 million would be directly related to development investment.
E-Land said it also offered a total of $6.8 million in public benefits:
• $2.5 million toward the infrastructure development of the DPL Homestead Program;
• $1.05 million for the repair and upgrade of the existing Marpi swimming pool;
• $0.4 million to develop a baseball field in Tanapag; and,
• $2.85 million for a lifelong education center to facilitate learning about Micronesian traditions and culture.
On March 22, 2021, DPL issued a notice of award to E-Land.
On April 29, 2021, DPL issued a letter to E-Land with a draft lease attached. The draft lease included the rent terms in E-Land’s proposal which was based on 1% of the appraisal value.
But on June 18, 2021, E-Land said the acting DPL secretary issued another letter to E-Land, advising that he was rescinding the award and canceling the RFP which would be reissued.
“The DPL Secretary stated that the reason for the rescission and cancelation was because after DPL submitted the draft lease to the Office of the Attorney General for review for legal sufficiency, the Office of the Attorney General rejected it, stating that E-Land’s proposal should not have been considered because it was allegedly not compliant with the minimum rental rates set by regulation,” E-Land stated in its lawsuit.
On June 28, 2021, E-Land met with the acting DPL secretary and DPL legal counsel. “DPL reasserted its same position stated in the June 18, 2021 letter, despite the fact that the…DPL Secretary and DPL legal counsel had assured E-Land previously that E-Land would not be disqualified for proposing less than 5% base rent,” the lawsuit stated.
In that same meeting, E-Land asked for time to assess its options.
According to the lawsuit, DPL agreed that it would give E-Land 30 days, to July 19, 2021, to review the situation before DPL reissued the RFP.
On July 8, 2021, E-Land said it requested DPL to “reconsider its decision to rescind the award based on the DPL’s Secretary discretion to exercise his fiduciary duty in negotiating basic rent under Section 145-70-110(e) of the DPL Temporary Occupancy Rules and Regulations.”
Hodson said the DPL secretary “breached his fiduciary duty in rejecting a proposal that was in the best interest of the Commonwealth by failing to stand by the original, correct, assessment that E-Land’s rent fee was actually greater than the rate of 5% fair market value and 1% of revenue.”
CNMI taxpayers have therefore been injured by the breach of fiduciary duty because of the loss of a $220 million investment in the CNMI, Hodson added.
