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Yokohama referendum, mayoral election to create significant risk for operators

The dual threats of a potential referendum on IRs and an upcoming mayoral election will likely force operators to take part in Yokohama’s Request for Proposal next year without any guarantee the city will follow through on its IR development plans.

The increasing possibility that such a scenario could become reality follows recent revelations that a local residents’ group opposing IRs has collected three times the number of signatures required to request a referendum on IR development – placing added pressure on mayor Fumiko Hayashi ahead of a mayoral election scheduled for autumn 2021.

Yokohama had previously planned to hold its RFP in mid-2020, leaving plenty of time for the start of the central government’s IR submissions period starting January 2021. However, both have since been delayed due to the COVID-19 pandemic with the central government recently postponing the start of the IR submissions period for nine months until October 2021.

According to Joji Kokuryo, Managing Director of leading Japan-based consultancy Bay City Ventures, this new timeline could create numerous headaches for Hayashi and her IR dream should the referendum go ahead.

“Unfortunately, the voting results would not realistically come in time for IR operator consortiums to consider as a variable in making their decisions on bidding for Yokohama,” Kokuryo, who believes a referendum would most likely be held in February at the earliest.

“The new national timeline for IR development plan submissions means that local governments need to start their RFP in March at the very latest, but probably earlier.

“For IR operators and their consortium partners interested in Yokohama, they would have to move forward with preparations for the RFP with the risk of the city government acting on a negative result in any referendum vote, and this is on top of the massive political risk of the mayoral election next Autumn – ironically just before the submission period to the national government.”

Given such a scenario, the key factor in determining Yokohama’s IR future will almost certainly come down to the mayoral election itself, and to a lesser extent the referendum which is not guaranteed to proceed.

While more likely than not, any final decision on holding a referendum lies entirely with a city council that has already approved IR development and associated budgets. Keep in mind that those 200,000 signatures still represent only 6.6% of the Yokohama population.

Likewise, even if the council does agree to a referendum and citizens vote against an IR, the vote is non-binding.

“While Mayor Hayashi has shown signs of ‘respecting the results’ and ‘personally’ being willing to drop the IR pursuit if citizens vote against it, she does not necessarily control the city council,” Kokuryo says.

“It will have to be a full effort by the mayor and city council to drop the IR bid.”

Ultimately, Kokuryo notes, it may all come down to the operators themselves and whether they are willing to pour resources into an RFP knowing Yokohama could effectively pull the pin at any moment.

“The referendum situation, regardless of the city council decision, is not making things any easier for Yokohama’s IR initiative or IR operators interested in taking part,” he explains.

“These political issues on the IR front are major points of concern for investors and operators.”

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