The city council has approved the allocation of P5 million as the city government’s counterpart to the development of a tourist rest area along Kennon Road.
The approval came with the condition that the agreement between the Department of Environment and Natural Resources and Mayor Benjamin Magalong that involves the city’s payment of lease to the DENR will be submitted for ratification.
The city council earlier sought a clarification on the agreement in which the city government is being asked to lease from the DENR the area identified as tourist rest site along Kennon Road.
The allocation of P5M for the site development at Kennon was identified as a priority project and is part of the supplemental budget earlier submitted for council approval, but was then deferred pending an explanation on the lease contract.
City Planning, Development, and Sustainability Office head Donna Tabangin told the council the original plan was for the DENR and the city government sign a memorandum of agreement to share the profits that will be derived from the area where a structure that will accommodate a souvenir shop, cafe, and toilets, including parking, will be constructed using the P9M grant from the Tourism Infrastructure and Enterprise Zone Authority (Tieza).
Tabangin said when the MOA was forwarded to the DENR central office, the former asked the city to instead lease the property for P220,000 annually. The DENR owns the 1,500-square meter area.
She said the city will engage a third party to operate the tourism rest area and pay a monthly rent of P800 per square meter.
Asked by Councilor Benny Bomogao how much the city government is projected to earn from subleasing the property, Tabangin said on the first year, the income from a lease of P800 per square meter would be P1,267,000.
“If the city spends for the maintenance of the building, the net profit on the first year would be P446,700,” she said.
Councilor Jose Molintas asked if the city government could instead request from the DENR the free use of the property, but City Administrator Bonifacio dela Peña said the mayor already negotiated with the DENR to lower the lease to P220,000 yearly.
“The DENR asked for a lease of P2.2M yearly, but the mayor negotiated and was able to lower it to P220,000 annually or P22,000 monthly,” he said.
Department of Tourism-Cordillera Legal Officer Brenden Quintos said the agency is waiting for the finalization of the agreement between Baguio and DENR before it can proceed with the issuance of documents for the P9M grant to be released by Tieza. – Jane B. Cadalig