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DPL still waiting for Hyatt’s proposal

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A JOINT public hearing was held on Wednesday by the House Committee on Natural Resources and the Senate Committee on Resources Economic Development and Programs to discuss the status of the Hyatt Regency Saipan lease agreement with the government.

Also in attendance were representatives from Hyatt Regency Saipan and the Department of Public Lands.

DPL Secretary Marianne Concepcion-Teregeyo said DPL had yet to receive an official proposal from Hyatt regarding a new land lease deal.

Citing Public Law 20-84, Concepcion-Teregeyo said the department must receive an official proposal in order to move forward.

P.L. 20-84 authorizes DPL to negotiate a new public land lease with certain existing public land lessees under new terms and consideration without publishing a request for proposals.

The law can extend a 40-year public land lease up to 15 years for a total of 55 years.

Hyatt’s current 40-year lease will expire in Dec. 2021.

Under the law, the new public land lease amount must be based on at least two new appraisals of the property to be leased, to which Hyatt Regency Saipan has complied, Concepcion-Teregeyo said.

She explained that the first appraisal was for roughly $51 million, while the second was for $57 million. The department then averaged both values to determine a starting point for negotiations, she said.

Department of Public Lands Secretary Marianne Concepcion-Teregeyo, second right, and other DPL officials met with lawmakers  and Hyatt representatives in the House chamber on Wednesday. Photo by K-Andrea Evarose S. Limol

Hyatt Regency Saipan, she said, indicated that it would begin negotiations at $16 million, but it is not an amount that DPL can work with, she added.

“This is why negotiations are here. We’re not saying ‘no’ from the get-go, but we do have to go back and forth on negotiations,” Concepcion-Teregeyo said, adding that the amount of improvement on the property was also taken into consideration.

Under P.L. 20-84, possible terms and conditions include new improvements or development on the property  that are beneficial to the economic development of the CNMI; public benefits and contributions; financial contribution to infrastructure improvement or development in the area of the leased property, including water, power, waste water, landfill, and highway infrastructure; and plans to alleviate or lessen traffic or parking congestion at or near the property to be leased.

“This allows the investor to pump in money without really being penalized… We can work with you and we can defer the big chunk of payments toward the middle part as they begin to see profits,” the DPL secretary said.

“The intent to roll up our sleeves and work with Hyatt is absolutely there, but…our hands are kind of restricted because we are the government [and] we are mandated [to follow] our rules,” she added.

She said discussions on the new land lease first began in 2018 with meetings between her department and Hyatt Regency Saipan.

An internal study was conducted by the department, taking into account market situations such as tourist arrivals and hotel occupancy rates, she said.

But the internal study was conducted before the pandemic, and projected the lowest occupancy rate to be just over 50%.  The actual hotel occupancy rate is much less due to the Covid-19 pandemic, which has shut down the tourism industry.

Concepcion-Teregeyo said Hyatt Regency Saipan has been paying a base rent of $25,000 a year since the 1980s.

She emphasized that DPL has done its due diligence, and has conferred with the Marianas Visitors Authority, the Hotel Association of the Northern Mariana Islands, the Saipan Chamber of Commerce, the Rotary Club of Saipan, and the Office of the Attorney General.

Hyatt Regency Saipan general manager Nick Nishikawa, for his part, said Saipan Portopia Hotel Corp. — the company that operates Hyatt Regency Saipan — is preparing to submit an official proposal.

Nishikawa said  the hotel has sentimental value to Saipan Portopia Hotel Corp. president Hitoshi Nakauchi because it belonged to his late father and former Saipan Portopia Hotel Corp. president Tsutomu Nakauchi.

As of Wednesday morning, Hyatt Regency Saipan had a 4% occupancy rate, and had laid off over 150 of its employees.

Lawmakers reiterated that they do not want to lose Hyatt Regency Saipan and would like to help the hotel in its efforts to remain on island.

Suggestions were made to revisit statutes and promulgated regulations.

It was also suggested that Hyatt Regency Saipan should not be penalized for non-compliance with submission deadlines due to the Covid-19 pandemic.

The House and Senate committees will draft a joint report with recommendations at a later date.

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