THE Department of Public Lands will issue a request for proposals in January 2021 if the Hyatt Regency Saipan fails to submit by Dec. 15 the required documents for the renewal of its land lease deal, which will expire in December 2021.
DPL Secretary Marianne Concepcion-Teregeyo, in her letter, reminded Hyatt Regency Saipan general manager Nick Nishikawa that Saipan Portopia, the company that operates the hotel, has not provided the required documents to DPL.
“DPL wishes to continue working with you and your company, but can only do so if Saipan Portopia timely communicates and submits documents,” Concepcion-Teregeyo said.
Variety was told on Thursday that Hyatt submitted additional documents last week, which DPL is now reviewing.
Concepcion-Teregeyo said the 22-month delay in submitting a complete proposal package has “expended much of the negotiation time granted by Public Law 20-84, and left less than a year for negotiations to be completed before Saipan Portopia’s lease expires.”
The DPL secretary gave Hyatt until Dec. 15, to submit the documents “so we can initiate the negotiations.”
“If documents remain incomplete, DPL will be forced to publish a request for proposals in January 2021 for the property. Just to be clear, Saipan Portopia can still submit a proposal if DPL publishes an RFP,” she said.
Concepcion-Teregeyo also raised the following issues:
She said Hyatt’s rent offer is pegged at .005 of the appraised value of the property.
This, she said, “results in extremely low submitted preliminary base rent numbers.” She asked Hyatt to “please review DPL’s internal study as incorporated into its regulations and as published in the Commonwealth Register, on the method to calculate base rent.”
DPL, she said, renews its request for Hyatt’s financial documents so the “department” can understand the hotel’s offer.
Concepcion-Teregeyo also noted that Hyatt is proposing to invest $10 million over the first five years for renovations of the rooms, an additional $5 million between year 5 and year l0 to improve the second wing, and an additional $5 million between years l0 and l5 to improve all remaining facilities.
She said this aggregates to a total of $20 million in investment over l5 years, “but does not yield any new construction, new rooms, or new towers.” Instead, it comprises upgrades to existing structures, or possibly even upgrades to furniture and equipment only, she added.
“These investments do not provide sufficient justifications for Saipan Portopia’s proposed rent based on the regulatory formula to calculate base rent for matured leases,” she said.
“Moreover, it certainly does not give me any justification to exercise my discretion to deviate from this formula based on benefits to the economic development of the Commonwealth,” Concepcion-Teregeyo said.
As for public purpose contribution, she said Hyatt is proposing a $1.5 million public benefit over a “reasonable period of time, to use in the Garapan Revitalization Project and such other uses that DPL and Kobe Portopia may agree.”
She said, “This proposal does not indicate a timeline for the benefit. A complete proposal must identify the timing of the contribution, so that it is not the 40th year when the contribution is paid.”
“As a bottom line, DPL would prefer to work with Saipan Portopia and does not merely want to publish a Request for Proposals for the property,” she added. “However, Saipan Portopia’s repeated requests for extension and repeated delays in submitting requisite documents force us to believe that there is no urgency on Saipan Portopia’s part to have a lease. We cannot proceed with this status quo, but must ensure that timelines and deadlines are met pursuant to our fiduciary duty to the people of the Commonwealth.”
