CDA: OPA report ridiculous

Disputing claims by the Office of the Public Auditor in its most recent report on the agency’s building renovation, the Commonwealth Development Authority has expressed intentions to renew for another five years the lease agreement for its existing office in Gualo Rai.

CDA Executive Director Marylou S. Ada branded as “ridiculous” the concerns raised by the OPA report that the government’s lending agency may not choose to exercise its option to renew the lease for another five years.

“OPA tries to make a point about CDA possibily choosing not to exercise its option to renew the lease for five years. This, according to their analysis, will result in a rental of $4.25 per square foot. This is an absolute ridiculous point,” she said.

“Why would CDA not renew for an additional five years after negotiating such favorable rent for a modern facility that was modified to fit its (CDA’s) needs,” said Ms. Ada in her letter to Public Auditor Leo LaMotte.

She pointed out that CDA obtained a two-year and another five-year extension of the lease agreement with the lessor, under which the rental would be increased by only .856 cent for a total square foot price of $2.107.

The lease agreement, which was amended in March 1998, locked the rental fee at $1.25 per square foot for a period of 10 years, which Ms. Ada stressed is in itself a coup resulting in a tremendous benefit to CDA.

“For seven years, CDA will be paying a rental of $2.107 per square foot for a building that is safe, modern, functional and looks like a modern banking institution,” she said. “The OPA fails to recognize the benefit to CDA for locking in the rental of a private commercial building for seven years.”

The OPA said CDA has failed to observe prudence as called for by the government-wide cost-cutting program in the renovation of its building in Gualo Rai, adding that the move will eventually increase CDA’s monthly rental of the property from $8,000 to $13,489, or a difference of more than $5,000.

CDA has entered into a new lease agreement with the property owner Ms. Margarita P. Kintol on April 9, 1998 which allows the Development Authority to occupy the space for a total of seven more years.

According to Mr. Tenorio, CDA had negotiated for an extension of the 20-year lease agreement before the renovation because the government lending agency intends to continue occupying the building.

He claimed the Office of the Public Auditor failed to review important documents, including minutes of the meeting when the CDA board discussed the renovation project, during its investigation.

He said official meeting records would reveal that he excused himself during the discussion and, eventually, when the board voted in favor of the renovation of the CDA building.

He also disputed OPA claims that awarding of the contract for the renovation was undertaken in violation of the Commonwealth Code by reprogramming money in excess of its annual budget to the project although it is not enough to cover the entire cost.

Mr. Tenorio also admitted that CDA had been short-sighted in giving out an interest-free loan to the property’s lessor but promptly added that the board will try to recover the interest which he was sure the lessor would not dispute.

Under the lease agreement, the lessor is responsible for the parking lot renovation costs. But CDA failed to include interest of the loan when Ms. Kintol agreed to absorb the costs through a monthly reduction in lease payments until the debt was liquidated.