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    Monday, July 22, 2019-7:15:56P.M.

     

     

     

     

     

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OPA: Public lands agency failed to collect rent for Lower Base lot; DPL disagrees

THE Department of Public Lands’ predecessor, the Marianas Public Lands Corp., “failed to timely and accurately assess and collect rental fees” for the public land in Lower Base that Lt. Gov. Arnold I. Palacios is leasing, according to the Office of Public Auditor.

But DPL Secretary Marianne Concepcion-Teregeyo said the rental fees, holdover fees and interests were all assessed.

In a report released last week, OPA stated that the appraisal report for the property, which had a fair market value of $121,000, was submitted 14 years late; and the appraisal report for the property with a fair market value of $171,000 was submitted three years late.

The OPA report added that DPL “did not take into account the date the adjacent parcel was physically utilized or encroached upon by the lessee prior to the second amendment to the lease agreement.”

But OPA said it cannot determine a conclusive methodology to calculate the amount owed to DPL.

“This encroachment was known to DPL and its predecessors, the MPLC and the Department of Lands and Natural Resources- Division of Public Lands,” OPA said. “However, previous management did not address the encroachment or pursue timely lease amendments, which complicates the accurate assessment of the fees and inhibits DPL from achieving its mandate to collect all funds from public lands.”

OPA made the following recommendations:

1. Properly determine the physical usage date of the adjacent parcel;

2. Reach concurrence with the Office of the Attorney General as to this date; and

3. Create a proper invoice for the lessee to avoid loss of revenue.

In addition, OPA suggested that DPL review every long-term lease and evaluate its status and inform the lessees of the results.

Palacios’ lease of public land was questioned by Koblerville resident Jack Muna in June last year, election year.

Muna accused Palacios of profiting from the public land even though he had not fully paid his lease agreement with the government.

But Palacios said he had consistently made lease payments.

Only July 10, 2018, the Office of the Attorney General requested OPA to review and assess DPL’s calculations of the rental fees.

In its report, OPA stated: “We found that although DPL’s revised billing, as prepared on Aug. 1, 2018, was in compliance with the June 8, 2018 legal direction from the assistant AG, DPL did not properly assess and collect the lease rental fees in accordance with the terms of the lease and its amendments by not enforcing the timely submission of required documents. This includes, but is not limited to the lack of documentation that DPL received business gross revenue tax returns and assessed whether additional rent is due, and enforced the timely collection of appraisal reports.”

OPA also said DPL did not take into account the date the adjacent parcel was “encroached upon by the lessee” before the lease agreement was amended.

Teregeyo debunked this statement, saying she submitted a business gross revenue computation showing that “no additional rental was due from the lessee as rental is greater than the 3 percent of BGRT.”

“Perhaps, it is OPA’s understanding that BGRT is charged automatically.”

She cited a contract provision stating that “lessee shall pay to the corporation in the manner described herein any surplus resulting from subtracting 3 percent of the gross receipts.”

OPA said DPL’s response to its first recommendation “does not address the issue.”

“Advising a lessee not to use the property when the lessee has already subleased the property, ignores the question of when was the property encroached upon,” OPA added.

“Regarding DPL’s response for OPA’s second recommendation OPA was well aware that the assistant AG had reversed his opinion. However, DPL inspection reports and the 2013 sublease agreement suggest the fact that the lessee encroached upon public land well before the signing of the second amendment.”

Regarding DPL’s response to OPA’s third recommendation, OPA said DPL may have to revise its current billing to the lessee depending on the date of concurrence with the AG’s issue.

OPA said all the issues it raised remain “unresolved.”