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New owner soon for Gardenia
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Posted on Jun 17 2008
The now defunct Pacific Gardenia Hotel could soon have a new owner once government officials with the Commonwealth Development Authority settle litigation with the property’s former manager.
A confidential government source says the CDA is poised either to sell or lease the hotel to an already approved buyer after a June 24 court hearing that will resolve whether the agency must further pay Rex Palacios for his management of the property.
The pending transaction will be based on the price tag CDA listed in a recent advertisement it bought in the Saipan Tribune, which asks for starting bids of $1 million, the source said. However, the source declined to identify the buyer or provide more information.
Several interested parties have previously shown interest in the hotel, the source added, but offered too little for CDA to accept.
CDA took over the Pacific Gardenia Hotel and the attached El Segundo Restaurant after the property’s original owner, Ronald Sablan, filed for bankruptcy.
Details on the upcoming transaction will likely surface at the hearing, the source said.
Meanwhile, attorneys for the CDA and Palacios are preparing for the hearing, to be held in Superior Court.
In a June 2 brief, the CDA lists a host of objections to paying Palacios further for his management of the property and other related costs.
Palacios took over the hotel as a court-appointed “receiver” in 2006 and struggled to keep the business afloat, according to prior news reports.
In the brief, CDA contends that Palacios “misrepresented the financial condition” of the hotel during his tenure as its manager and, despite his demand for payment, he agreed before assuming the position that he would be paid only from the proceeds of the hotel’s operation, not from the CDA’s funds. Moreover, the brief notes that Palacios was found “grossly negligent” for his failure to provide the Department of Labor with records and payroll statements.
“Such failures were commonplace” during Palacios’ term as the hotel’s receiver, the brief says. “CDA objects to [Palacios’] claims and to any further payment…”
Neither Palacios nor his attorney could be reached for comment as of press time.
