The City Council through its committee on public investigation and accountability chaired by maverick city councilor Alexander “Aleckoy” Lim has recommended either a termination, buy-out, or re-negotiation of the 2009 build-operate-transfer (BOT) contract entered into by City Hall and the private contractor who built the once idle Agora Market, now the bustling City Square, for being defective and disadvantageous to the government. Having earned more than P120 million since it started its operation in the late 2008, the City Square management has been allegedly remiss in its duty to pay what is due to the City Government, the committee report said.

During the time of ex-city mayor Dan Lim who ironed out the contract with TBC Realty and Development Corporation, represented Juan L. Apostol, president of J.L. Apostol Enterprises, the project proponent/operator and private party to the R.O.T. Agreement and Ko Beng Sum, president of TBC Realty and Development Corporation, the City stands to earn only P25 per square meter while the private contractor is leasing out the same property to tenants at P600 per square meter, an agreement deemed “injurious” to the government. Early this year, operations of City Square became tainted with graft and corruption after former governor Victor Dela Serna divulged to the public that ex-mayor Lim, based on personal confessions of Ko Beng Sum, was receiving “under-the-table-payola” from the City Square management at P1 million “plus, plus” a month, or at least P12 million a year allegedly pocketed by ex-mayor Lim. The allegation had since been denied by ex-mayor Lim.

Dela Serna, councilor Lim, and lawyer Zotico O. Ochavillo had filed a civil case before the Regional Trial Court (RTC) seeking to nullify the City Square contract. The City SP committee report, however, was deliberated on last Friday's session without prejudice to the pending case as the same was made in aid of legislation. “The allegations of complainants regarding the legality of the R.O.T., in aid of legislation, and limited to matters that do not contravene with the pending cases filed at the Regional Trial Court and the Office of the Ombudsman-Visayas relative to the matter being referred to the Sangguniang Panlungsod,” the report said. In the report submitted by Lim to the Sangguniang Panlungsod (SP), he found that the City Square management has failed to pay the City Government “the agreed yearly rental for 2009 in the amount of P5-million or 20% of the Gross Revenue on said year, whichever is higher, pursuant to the terms and conditions of the Rehabilitate-Operate-Transfer (R.O.T) Agreement.”

The committee led by Lim uncovered that City Square management under TBC Realty and Development Corporation has failed to remit real tax from 2009 up to the present, “in violation of the terms and conditions stipulated under the R.O.T. Agreement and City Ordinance No. RC-001 (as amended), The Revenue Code of the City of Tagbilaran.” Moreover, the management has not paid city business tax since City Square started operating in the last quarter of 2008 up to the present. It was also found out that Parking Fees collected from 2008 to 2013 in City Square's reported revenues which is the basis of computing the 20 percent rental due to the City, were not included in the income report. The City Square management, according to the report, has also violated several provisions of Republic Act 7718, or the Philippine Build-Operate-Transfer (BOT) Law and Its Implementing Rules and Regulations (IRR).

If the Office of the City Mayor chooses not to terminate the contract, the City Government may opt for a buyout of the contract, an option provided under the BOT law, the report has recommended. The buyout option is based on two considerations: capitalization of consortium to rehabilitate the unfinished building of the Old Agora Market (P80-million) and consortium's reported revenue from 2010 to first-half of 2013 P78,206,073 (net of yearly Rental paid to the City). City Hall may also opt to re-negotiate the reported “disadvantageous” contract, the committee has recommended. “The terms of the City in re-negotiating for the continued operation of the City Square by the consortium (TBC Realty & Development Corp.) of the remaining 20 years of the “Period of Concession” in the R.O.T. Contract will be determined through a “City Square Task Group” to be created by the City Chief Executive that will be tasked in the re-negotiation of the ROT with the primary objective of increasing the guaranteed yearly rental from P5-million to an amount that will be deliberated upon by the task group with the consortium with an accompanying provision for an escalation rate, higher than the existing 20% of Gross Revenue, the report said.

Should City Mayor Baba Yap decide to renegotiate the contract, the committee mulled for a creation of City Square Task Group who would undertake the following measures, among others: initiate negotiations with the consortium, investors and/or operators of the City Square; conduct a comprehensive study and analysis of the financial position and earning capacity of the City Square; engage in consultation with government or private sector to advance the interest of the City in the formulation of new terms and conditions of the R.O.T. Agreement; and (stand) responsible for the formulation of the terms and conditions in the re-drafting of the R.O.T. Agreement-Tagbilaran Business Center that is most advantageous to the City. “It is also recommended that the City Treasurer should adopt a system of verifying the reported monthly revenues of the City Square management by regular inspection of the Books of Accounts of the City Square; spot-checking of City Square tenants' payments to management; and adopt accounting forms for the verification of remittances made by City Square management,” the committee report said. For its part, the City SP is recommended to “conduct deliberations on the letter-request of Mr. Juan L. Apostol addressed to Honorable City Mayor John Geesnell L. Yap II, dated November 13, 2013, subsequently being referred to the Sanggunian by the City Chief Executive through a letter dated November 28, 2013, regarding the assessment of unpaid rent and taxes including accrued penalties thereof,” and “craft legislation that would help establish integrity, transparency, proficiency and accountability in all cash remittances to the City.”