Osaka’s ambitious project to develop an integrated resort (IR) on Yumeshima Island has encountered a wave of scrutiny following a recent audit committee report. The project, led by MGM Resorts, has been the subject of intense debate, particularly concerning the legality of the construction company selection process and the lack of land rent payments. As the project progresses, the concerns raised by both citizens and officials could have significant implications for the future of the development.
Background: The Yumeshima Island Project
The development of an integrated resort on Yumeshima Island is a key component of Osaka’s economic growth strategy. The 21-hectare site is slated to host a world-class resort and casino, spearheaded by MGM Resorts, with the aim of boosting tourism and generating significant revenue for the city. Preparatory work for the project began late last year, focusing on extensive liquefaction measures to stabilize the ground. This work, essential for the safety and success of the resort, involves pouring concrete into the ground to prevent liquefaction, a process critical given Japan’s susceptibility to earthquakes.
The Citizen Group’s Concerns and Audit Committee Findings
In June, a citizen group requested an audit into the project, raising two primary concerns. First, they argued that the city had not received rent for the land from MGM Resorts, despite construction being underway. Second, they questioned the legality of the selection process for the construction company responsible for the liquefaction measures, claiming it was done through a discretionary contract rather than a competitive bidding process.
The Osaka City Audit Committee’s response was mixed. While the committee dismissed the issue of unpaid rent, stating that it was not illegal, they were divided on the legality of the construction company selection. The report highlighted that two committee members saw no illegality, arguing that the contract was placed by a private company, which allowed for more discretion. However, the other two members expressed concerns that the project, being akin to a public work, should adhere to stricter standards of fairness and transparency.
The Legal Debate: Public vs. Private Work
The crux of the controversy lies in whether the IR development should be treated as a private project or as a public work. Those arguing it is a public work suggest that the selection process should have been more transparent, potentially involving a competitive bidding process to ensure fairness. In contrast, those viewing it as a private project believe that the developers have more leeway in how they manage the construction contracts, including the selection of companies through discretionary means.
This debate is not just a matter of legal interpretation but also of public perception. The audit committee, while refraining from taking direct action, emphasized the need for the project to be handled with care to avoid raising doubts or suspicions among citizens. This cautionary stance reflects the delicate balance the city must maintain between advancing a high-profile development and maintaining public trust.
The Financial Aspect: JPY25.5 Billion for Liquefaction
One of the most significant aspects of the project is the massive cost associated with the liquefaction measures. The total expense, estimated at JPY25.5 billion ($173 million), is necessary to ensure the stability of the land where the IR will be constructed. This phase of the project is expected to continue through the Osaka Expo in 2025, with completion targeted for April 2027.
The scale and duration of the liquefaction measures highlight the challenges of developing such a large-scale project in a seismically active region. The cost and complexity of these measures also underscore the importance of ensuring that all aspects of the project are managed with the utmost care and professionalism.
The Osaka Expo 2025: A Potential Complication
Adding another layer of complexity to the situation is the upcoming Osaka Expo in 2025. The international organizer of the Expo has already expressed concerns about the ongoing construction, specifically regarding potential noise and visual disturbances during the event. They have asked Osaka officials to consider halting the IR construction for about six months next year to mitigate these issues.
This request poses a significant challenge for the project timeline. Halting construction could delay the liquefaction measures, potentially pushing back the overall completion date and increasing costs. The city and MGM Resorts will need to carefully weigh the potential impact of such a delay against the benefits of a smoother Expo experience.
The development of the integrated resort on Yumeshima Island is a complex and multifaceted project that faces numerous challenges, from legal scrutiny to financial hurdles and the logistical demands of coordinating with the Osaka Expo. While the audit committee’s recent report has not resulted in any immediate action, it has highlighted the need for greater transparency and caution moving forward.