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Court sides with Ginowan in dispute with developers

Date Posted: 2005-07-22

Plans to turn an unused landfill into a premier development in Ginowan City have been unsuccessful, and construction companies and developers accuse the city of being deceptive.

Naha District Court disagrees, rejecting this week a lawsuit that charged Ginowan City with lying and failing to use good judgment in selecting companies for a project to transform the site adjacent to the Ginowan Convention Center into a premier shopping and tourism area. The city contended successfully they had acted in good faith, and that the problems fell with deception and financial woes on the part of those companies seeking the project.

Ginowan Bay City Development Corporation had been feuding with the city for nearly five years, demanding they be returned the Y411.8 million they had invested, and with nothing to show for it. The development company is a consortium of construction companies and developers working with Ginowan City.

The project is on the verge of strike three, with the latest suitor, Prince Hotels, on the verge of bailing out. The design plans called for constructing a large hotel complex, but that appears to be dead as Prince Hotels’ parent company, Kokusai Kogyo, is embroiled in financial scandals.

DaiEi Corporation, which operates a chain of department stores and shopping centers across Japan, was first to claim the rights to build on the site. Negotiations were well under way when DaiEi fell victim to changing economic environments. Instead of adding Ginowan to its string of successes, DaiEi wound up sharply trimming its nationwide business, which included closing two stores in Okinawa. The remaining two DaiEi operations on Okinawa are now being phased out, with completion expected in the next few months.

Ginowan City rebounded, to the delight of the Ginowan Bay City Development Corp., inking a tentative deal with the international duty free shopping giant, DFS. Optimism turned to a pipe dream as DFS ultimately, after much give and take with Ginowan City, rejected the site in favor of a more lucrative location.

DFS opened its Galleria store a year ago in Omoromachi District of Naha City. Omoromachi is billed as the Naha ‘New Town’ with several large shopping malls and department stores, hotels, entertainment complexes, condominiums and government offices. The district is ringed with dozens of smaller businesses catering to everything from clothes to high tech electronics.

“We had no reason to believe that those companies would not agree to develop the site with us,” a Ginowan City spokesman says, “but then circumstances changed and they couldn’t take the final step for one reason or another. The court ruling was fully in line with Ginowan’s position. It told the developers “Ginowan City did not make any mistake in selecting prospective partners, and did not lie to the Ginowan Bay City Development Corp.”

The presiding judge wrote that “In this case the blame lies on companies who could not fulfill their promises, were fuzzy on conditions they required from the city in order to set up in the area, or decided at the last moment that they could not meet the financial and other conditions set by the city.”

The question confronting Ginowan City now is where to go next. They still have the land, and believe in the development concept. Ginowan Bay City Development Corp., hasn’t bailed out completely as it seeks to recoup its losses with a profitable venture. The city is searching for a new suitor.

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