A PIECE of public land in Garapan has become the bone of contention between longtime Saipan businesspeople and the emerging casino development.
On Friday, Superior Court Associate Judge David Wiseman granted H.S. Lee Construction Co. Inc.’s application for a temporary restraining order against the Department of Public Lands “from conveying, transferring or disposing any part of Lot 104 D 01†in Garapan.
H.S. Lee needs 1,950 sq. m. of this piece of public land in order to meet its parking requirements for both hotel and its commercial establishment.
H.S. Lee stated in its complaint filed Friday that DPL Secretary Tenorio had last year assured them that the property would be leased to them.
Subsequently, it was learned that another developer, casino developer Imperial Pacific International (CNMI) LLC, better known as Best Sunshine International, was eyeing the same lot for Phase I of its $7.1 billion casino-hotel development.
Plaintiff Lee said they were told by DPL and Tenorio that the piece of public land had been reserved for H.S. Lee as memorialized in Tenorio’s Sept. 10, 2014 letter to H.S. Lee Construction Co. Inc. corporate secretary Sung Soo Lim.
In that letter, Tenorio said, “DPL has reserved a portion of public land per your request but awaits final review and approval, until such time that information being requested to formalize the permit are submitted by your firm.â€
Tenorio asked for two documents from H.S. Lee: a board resolition by H.S. Lee Construction Co. Inc. which authorizes a permit to be executed with DPL and a signatory representing the company and “any relevant documents with the Zoning Office, including Zoning Office approval of your project.â€
In its complaint, H.S. Lee said that the defendants “extended an offer of contract to the plaintiff and gave him the power of acceptance through completion of two acts.â€
H.S. Lee said it accepted the offer and complied with the requirements.
“The Department of Public Lands breached this contract when it agreed to transfer a portion of the 1,950 sq. m. of Garapan property to the Chinese casino,†the H.S. Lee complaint stated.
For the developer, transfer of the Garapan property and the resultant loss will cause direct and substantial harm to the plaintiff that cannot be compensated by monetary damages as it involves a unique parcel of real property contiguous to H.S. Lee’s existing land and commercial structure.
H.S. Lee claims the public land assured them by DPL is a critical element in the viability of the hotel and the large restaurant on the plaintiff’s real property.
Lee is referring to the national restaurant chain that Triple J. Enterprises is bringing to Saipan and which is supposed to be located on the ground floor of the H.S. Lee building that Triple J leased long term on account of the DPL assurance.
For H.S. Lee, without this piece of land, its loss permanently and forever changes the viability and character of this commercial structure.
As it seeks to stop DPL and Tenorio from transferring, leasing or conveying the property, it seeks relief in court through a temporary restraining order, preliminary and permanent injunction.
It is seeking damages according to proof along with costs.
It asked the court for other relief the court may deem appropriate.
Triple J’s lease
In his affidavit, Triple J Enterprises chairman Robert H. Jones stated that he participated in a meeting with Tenorio, Triple J staff and H.S. Lee representatives in a discussion of the proposed use of the 1,950 sq. m. of public land.
Jones said that Triple J entered into a lease agreement for 8,000 sq. ft. of ground floor space at the commercial building for 32 years believing that the issue of public land had been resolved as H.S. Lee agreed to DPL’s request for it to reduce its 1,950 sq. m. request down to 1,000 sq. m.
“Secretary Tenorio asked H.S. Lee to assist the government by reducing their request for public land from 1,950 sq. m. to 1,000 sq. m. so as to provide a compromise between the competing requests for the use of this land,†said Jones.
Jones said an analysis by H.S. Lee indicated that this reduction in public land request would mean a significant cost to H.S. Lee as it would require construction of multilevel parking deck.
“In spite of this cost, H.S. Lee agreed to the reduced 1,000 sq. m. of public land in order to assist the government and resolve any further issues on this matter,†said Jones.
It was out of this assurance that TripleJ and H.S. Lee entered into a lease agreement.
“Triple J would not have entered into these lease agreements without assurances of the provision of adequate parking by both Secretary Tenorio and H.S. Lee. The loss of this parking will require cancellation of both these leases and significant harm,†said Jones.
The 8,000 sq. ft. lease had an initial price of $24,000 a month and a $48,000 deposit.
The term of the lease was for 32 years.
Moreover, to establish the fair market value of the public land to determine lease, H.S. Lee paid $1,000 for an appraisal. The appraisal showed the 1,959 sq. m. of land was valued at $115,000.
Timeline
On May 14 last year, plaintiff H.S. Lee and Triple J discussed the lease of about 8,000 sq. ft. of floor space at the commercial building to be used for an international chain restaurant with an associated $1.5 million investment.
Two months later, on July 13, H.S. Lee asked Zoning Office about the required parking spaces. Maryann B. Arriola, who was then the acting Zoning Administrator, told them they need 68 parking spaces and this meant a requirement of 1,950 sq. m. of additional land to comply with the Zoning Law requirements.
On Sept. 10, DPL assured H.S. Lee that DPL had reserved a portion of public land pending final review and approval.
On Oct. 24, the plaintiff found out that Best Sunshine was interested in leasing the same property they were eyeing for parking space.
At a meeting on October 28, Tenorio told the plaintiff he had the impression that Zoning had approved a permit for H.S. Lee and that no additional land was required. Tenorio cancelled the public land reservation.
Further, as a compromise, Tenorio asked for H.S. Lee to reduce the land requirement to 1,000 sq. m.
Again, DPL, the plaintiff claimed, assured them that the latter would get the land lease.
This led H.S. Lee to pay architects to design a new parking structure.
By Jan. 16 this year, a site plan had been completed for the parking structure.
H.S. Lee also met with Zoning officials to consider their two-story parking structure.
Then DPL told H.S. Lee that the land was further reduced down to 290 sq. m. which H.S. Lee said would not be sufficient to meet their requirements and contrary to previous assurances.
Best Sunshine’s Phase I
Best Sunshine and DPL had both stated in a previous interview that there was no agreement yet between them on the lease of the close to two hectares of public land in the area where H.S. Lee is constructing the hotel and commercial facility.
Best Sunshine CEO Mark Brown and DPL Secretary Tenorio separately confirmed to Variety that they were still negotiating for the lease.
Brown also confirmed that the Garapan site would be the location of the first phase of the $7.1 billion casino-hotel project.
The leases that Best Sunshine entered into with private landowners and DFS amounted to about $6.5 million last year, conditioned on the construction of a 200-room hotel in the area.
In as much as Best Sunshine believes that it has to buckle down to construction, it opted to begin the archaeological recovery work at the site where significant artifacts are sitting.
It announced a plan to work with UOG and archaeologists to safely recover these artifacts and Best Sunshine would not begin any construction until the land had been cleared.
It also promised to open up the site for educational purposes once archaeological work begins.
Imperial Pacific is planning to build an aggregate of 4,252 rooms and 300 villas up to 2019.
Phase I, according to a previous plan submitted in the Hong Kong Stock Exchange, will involve construction of a 50-room town hotel which will open in 2016 and another 200-room hotel to be opened by 2017.