A DAY after their meeting, the Department of Public Lands informed Saipan Portopia Hotel Corp., doing business as Hyatt Regency Saipan, that DPL is proposing a new 40-year land lease agreement with the hotel whose current 40-year lease of 4,432 hectares of public land in Garapan ends in Dec. 2021.
In her letter Friday to Nick Nishikawa, Hyatt Saipan general manager, DPL Secretary Marianne Concepcion-Teregeyo said the 28-page draft lease agreement is “based on the final negotiation” between the hotel and DPL. It does not require legislative approval.
She asked him to review the draft and indicate to DPL “your acceptance at your earliest convenience so we can send you a final copy for your signature.”
Upon submission of Hyatt's acceptance, she said DPL will publicize the notice of intent to lease eight times within 15 days in the local newspapers and on the DPL website.
Article III of the draft lease agreement states that the “term…of this Lease shall be for a period of forty (40) years, unless otherwise terminated or cancelled pursuant to applicable provisions of this Lease. The Term shall commence on [Jan. 1, 2022].”
Article 4 states that an “extension of up to fifteen years may be granted with the approval of the Legislature in accordance with 1 CMC § 2806(c)(1).”
The proposed annual rental schedule is as follows:
Guaranteed Annual Minimum
0.5% of Fair Market Value
Percent of Gross Receipts
1% of Business Gross Receipt
Concepcion-Teregeyo also informed Nishikawa that following the attorney general’s approval, these pending administrative items will be due and required for final processing:
• Payment of $271,467.50 for the Annual Base Rent based on 0.5% of the Appraised Market Value for the first five-year period (This fee is due upon signing of the agreement).
• Payment of $250,000 for Security Deposit (This fee is due upon execution of lease agreement and shall be maintained for the duration on the lease term. Funds remaining on account with DPL after the completion of the proposed development in excess of $250,000 shall be released to the lessee upon completion of the project development.)
• Payment or Construction Bond of $500,000 for Additional Security Deposit for construction/renovation costs. (This fee represents 5% of the total cost of the proposed project to which the lease pertains. These funds will be held by DPL to secure construction start up, and remediation costs. This amount can be drawn down to use during construction.)
• Evidence certifying the ability to procure liability insurance with a minimum coverage of $1 million in the aggregate which must co-insure DPL and the CNMI government (Actual insurance policy will be due within 30 days of the lease commencement Date.)
In an earlier statement, DPL said it was collecting a flat rate of $25,000 a year in basic rent from Hyatt, based on its initial fee simple appraisal, and approximately $300,000 a year in total when business gross receipt was included.
The only international brand hotel in the CNMI, Hyatt as of last year employed 260 employees, 98% of whom were local, U.S. qualified workers, according to the Saipan Chamber of Commerce which supports the extension of Hyatt’s land lease agreement with DPL.
The Hotel Association of the NMI, which also supports the Hyatt lease extension, noted that the hotel has “led the local hotel industry in the development and recruitment of local resident and U.S.-eligible workforce, even extending its expertise to assist other hotels and travel industry partners in increasing their own U.S.-eligible workforce.”
Moreover, “Hyatt has contributed millions of dollars worth of services, products and other donations to benefit the local community, including numerous nonprofit organizations.”
“This is the caliber of investor the Commonwealth needs to retain,” HANMI added.