The other side of hotel sale row
I had a visitor last week in the person of newly elected Mayor Belen T. Fernandez of Dagupan City, who wanted to give her side on the controversial sale of the McAdore Hotel which the city government bought for P50 million but was sold for P119 million, thus earning a profit of P69 million for the city (As I See It, 6/19/13).
The mayor, a reluctant candidate in the May elections, and other Dagupeños oppose the sale because the selling price, even with a P69 million profit for the city, is still undervalued. Even way back in 2002, or 11 years ago when McAdore was bought by the city for P50 million, it was documented in the deed of sale that the land alone was worth P24,000 per sq m, or P122,712,000 for the 5,113 sq m of prime commercial land in the downtown area of Dagupan. And prices have gone up considerably since 2002.
In the interest of fair play, we are airing the side of the new mayor and other Dagupeños opposed to the sale.
Mayor Fernandez said the correct process was not followed in the sale of the seven-story hotel. She said she will not oppose its sale, even to the same buyer, if the price is right and due process was followed. She narrated the history of the hotel, originally the five-star McAdore International Palace sitting in the heart of Dagupan.
The total floor area of the seven-story hotel is 11,000 sq m. It was foreclosed by the bank when the owners could not repay the loan. It was sold by the Asset Privatization Trust to the Dagupan City government at a special rate of P50 million on the presumption that it would be converted into the new city hall by then Mayor Benjie Lim. But throughout Lim’s term as mayor, no plan materialized to develop it into a city hall.
Instead, Lim asked the city council to grant him authority to negotiate the sale of the property after a prospective buyer offered P70 million for it. However, the city council led by then
Vice Mayor Fernandez refused to grant him that authority, pointing out that the appraised value of the property at that time was P180 million.
When Vice Mayor Fernandez went to the United States to receive an award for good governance in April 2012, Lim saw an opportunity to bypass her.
Mayor Lim called a “special emergency session” of the city council—without written notice and without the knowledge of the presiding officer, Vice Mayor Fernandez, even ordering some councilors who were then in Manila attending a seminar back to Dagupan to “address an urgent matter.”
Nine of them eventually convened way past session hours. Less than 10 minutes after they convened, the nine councilors (now called the “Judas 9” by Dagupeños) passed a resolution giving Mayor Lim blanket authority to sell the McAdore Hotel.
Not long thereafter, the Department of Interior and Local Government heard about the “Judas 9” session, and made an investigation. In its published opinion, the DILG found that the session was: “irregular” on numerous aspects, and ruled that the enacted resolution granting Mayor Lim authority to sell McAdore Hotel was illegal.
City Council Secretary Ryan Raganzo filed a petition for the issuance of a writ of injunction to stop the sale of the hotel. Judge Emma Torio of Dagupan RTC issued a temporary restraining order (TRO) “in the higher interest of substantial justice.”
Despite the TRO, Lim still continued to broker its sale, even creating a “disposal committee” to “properly appraise” the value of the McAdore property to ensure its sale as soon as the TRO expired. The chair of that committee: Mayor Benjie Lim.
Lim’s disposal committee pegged the minimum price for the McAdore Hotel at P100 million. However, consider these facts:
• The appraisal that was used to determine the minimum price was based on the property’s “zonal value” established before 2007, and not the industry-accepted and generally used “current market value.”
• Lim eventually sold the property to AMB ALC Holding and Management Corp. which won the bidding with a price of P119 million, or only approximately P18,500 per sq m.
• Do not forget, however, that the hotel was sold to Dagupan City in 2002 for P50 million as a special concession by the APT. The deed of sale noted that the total value of the land was actually P122,712,000, or P24,000 per sq m.
• Even more curious is the fact that Lim used to own a 715-sq m property only 200 meters from McAdore, and sold it to Land Bank in 2005 for P35,000 per sq m.
• Since 2005, it has been accepted by real estate professionals that the market value of properties in the area has increased considerably, with some calculating that the property has doubled in value.
• The Dagupan RTC finally declared the “Judas 9 emergency resolution” null and void, thus invalidating the sale of the McAdore Hotel.
• Lim’s camp is now claiming that Dagupan “wasted a golden opportunity” to earn a
P69-million profit. But basing it on market values eight years ago, Mayor Fernandez said the “P69-million profit” was actually a P95-million loss.
The lady mayor said she still wants to convert the hotel into Dagupan’s new city hall as the very old city hall beside it is now “dilapidated and falling apart.”
Where will she get the money to refurbish it? “I will be able to produce it,” she replied.