City hotel giving Sonny headache

CEBU, Philippines - Toledo City Mayor John Henry “Sonny” Osmeña is facing various problems in obeying state auditors’ recommendation to terminate the lease contract of a city-owned hotel.

For one he needs approval from the City Council, whose members are mostly allied with former mayor Aurelio Espinosa, whom he defeated in the elections last year.

It was Espinosa who leased out the hotel to a management company in 2011.

“Ako personally, I need to look into the documents first before I could say that I’m for the termination or not…; then maybe we will decide as a group,” said City Councilor Helen Jill Espinosa.

Another concern is that the city has to deal with the cost of maintaining the property because even without any tenants the city has to pay the monthly amortization.

Osmeña said he still has to confer with the city treasurer as to how much the hotel management is paying and how much the city is paying the bank for its loan made in constructing the hotel.

He would also check how much it would cost the city in terms of custodial expenses once the city itself starts operating the hotel.

Osmeña said he already wrote the management company notifying the city’s intention to terminate the lease contract and had an inventory of the property and equipment of the hotel.

“I would only be happy to terminate it but I have to deal with the cost of maintaining that building,” he added.

The management of the hotel has reportedly failed to pay the city government the monthly rental and remit its monthly share of the gross revenue totaling to P1.8 million, excluding the city’s eight-percent share on gross sales for 2013.

This prompted the Commission on Audit to ask the Toledo City government to terminate the Contract of Lease between the management of the hotel.

In its 2013 audit report, COA also recommended the immediate collection of overdue rentals and the monthly share on gross revenue and other receivables such as but not limited to taxes, assessments, insurance premiums, reimbursements and other items from the management so that the city could use the generated revenue for its planned projects, programs and activities.

The Local Finance Committee had already recommended to Osmeña that the contract be terminated and the operation of the hotel building be controlled by the city.

But Osmeña said only the City Council can authorize him to terminate the contract and not the committee, which is under his office. —/RHM (FREEMAN)