LIEUTENANT Gov. Arnold I. Palacios would like to inform the people of the CNMI that he has been regularly paying rent to the government for the properties he leased in Lower Base.
Palacios owns A&M Corporation, which occupies parcels of public land in Lower Base.
In an interview on Thursday, he said: “I am paying an additional amount over and above the present rental payment.” He said he is also paying past rentals based on a settlement executed in 2020.
He said the settlement agreement was signed by then-Department of Public Lands Secretary Marianne Concepcion-Teregeyo and the attorney general two years ago, and it “will be closed three years from now.”
Palacios said he was appalled that individuals who have recently brought up this issue appear to have deliberately missed these facts.
Right now, he said he has not received any communications from DPL or the AG’s office pertaining to the matter.
In fact, he said, “the issue was already closed and cleared” by the Office of the Public Auditor.
“They’re digging on issues. This is political mudslinging of something that has been already settled,” Palacios added.
The allegations
Taxpayers Steven Dela Cruz and William Villagomez are asking DPL Secretary Sixto Igisomar to report to OPA that Palacios is defrauding the government.
In a joint letter, Dela Cruz and Villagomez said Palacios violated the land lease agreement with DPL for his A&M Corporation in Lower Base. They provided the DPL secretary the documents pertaining to the 25-year land lease deal that Palacios entered into on Dec. 14, 1990, and amended on April 28, 1992.
Dela Cruz and Villagomez said Palacios “defaulted on his monthly payments for more than 30 years, and that as of May 6, 2020, the lieutenant governor was in arrears of $65,000.”
They said despite this unpaid balance, Palacios requested the government to extend the land lease contract for another 25 years, with a monthly payment of $1,170 under A&M Corporation.
On Nov. 20, 2011, they said Palacios assigned the leased properties to South Pacific Lumber, Co. for $4,500 a month without written consent from DPL.
“This assignment was a direct violation of Article 14 of the new lease. Further, Arnold did not file this assignment with the recorder’s office in pursuit of keeping it confidential and hiding it from DPL,” Dela Cruz and Villagomez said.
They said Palacios “hid this agreement from DPL because he did not want to pay the additional 1.45% interest fee” as required by the new land lease contract.
“This is completely wrong,” Dela Cruz and Villagomez said adding that Palacios “is defrauding and stealing money from the CNMI government.”
Setting the record straight
Palacios said the settlement agreement allows him to develop the properties he leased from the government and rent out spaces for warehousing.
“I have the documents of the new lease and the copy of the settlement agreement. The AG signed it, I signed it and then-DPL Secretary Marianne Concepcion-Teregeyo signed it,” Palacios said,
He added that there is a provision in the lease agreement that allows the lessee to sublet the property. He noted that there are many other original lessees who developed properties and leased warehouse spaces.
Palacios said his business involves commercial rentals, so he built a warehouse and made it available to a company that needed it. The company rents space from him.
“It is in the agreement that we can sub-rent — that is allowed in the lease agreement,” he reiterated.
Regarding the arrears which he is paying now under the settlement, Palacios said they were they result of a dispute between him and the then-Marianas Public Lands Authority many years ago.
At the time, he said, MPLA tried to charge him over $1 million, which he thought was “crazy.” Both parties at the time were at fault, he added.
When he requested to lease additional property, the MPLA director at the time permitted him to go ahead and start utilizing the property while waiting for the final lease agreement.
However, he said, his company needed to take care of its outstanding issues and disputes, and when those were resolved, he and MPLA were able to negotiate a new lease.
When these issues were raised two years ago, Palacios said the AG’s office recommended a fee for intermittent use of the additional property. During the negotiation among DPL, the AG’s office and his attorney, it was recommended that “we go ahead and settle, and that is where we are at now.”
He added, “We came up with an amicable…settlement agreement which we executed with DPL, and [was] reviewed by the AGO…. We went through it and executed a settlement agreement in 2020.”
Arnold Palacios
