http://thestar.com.my/metro/story.asp?file=/2011/6/21/central/8923503&sec=central
TWO Petaling Jaya City councillors hit out at Bukit Gasing assemblyman Edward Lee for issuing statements on the rent hike at the PJ Palms Sports Centre without fully understanding the tenancy agreement details.
Richard Yeoh and Derek Fernandez were responding to the story “Proprietors cry foul over higher rent under new agreement” published in Friday’s StarMetro.
The proprietors of Joe’s Unisex Salon and Waikiki Bar had claimed harassment by the building’s main tenant to sign a new tenancy agreement or leave the premises.
Proposals were called for via an open bidding. Of the half dozen or so proposals, Sepang Mekar’s was the most advantageous to the MBPJ and it offered only family-friendly facilities. — RICHARD YEOH The proprietors also complained of a four-fold increase in their rental rate under the new agreement with Sepang Mekar Sdn Bhd, the main tenant of the centre formerly known as Kelab Syabas.
The agreement was signed between the Petaling Jaya City Council (MBPJ) and Sepang Mekar, who are the landlord and main tenant respectively.
Yeoh stressed that it was incorrect and misleading for anyone to say that the premises was let out at “11 sen per sq ft”.
“That calculation was evidently derived based on the total land area of the title that PJ Palms sits on of 136,500sq ft (12,681sq m) and the RM15,000 monthly rental paid by the head tenant, Sepang Mekar to the MBPJ,” he said.
“For the record, the area under the tenancy is less than half of the total land area, that is about 60,000sq ft.
“We must also take into account the RM4.2mil that Sepang Mekar is legally bound to spend within the first two years to rebuild and upgrade the facilities at the centre,” said Yeoh.
“The 136,500sq ft (12,681sq m) refers to the entire land area held under the title, including the Complex C carpark, which is not included in the tenancy.
“The fictitious ‘11 sen per sq ft’ rate is irrelevant as the agreement is not even based on per square footage, but on a lump sum of RM15,000 monthly rental.”
The tenancy agreement was signed on May 21, 2010.
Yeoh said if there was no breach of the agreement and both sides agreed on the subsequent rental reviews, Sepang Mekar was guaranteed a tenancy of 12 years made up of four three-year terms.
Unfair: The proprietors of Waikiki Bar and Joe’s Unisex Salon are crying foul of the harassment they have been enduring from Sepang Mekar, the main tenant of PJ Palms Sports Centre. “Sepang Mekar will be paying a monthly rental of RM15,000 to the council for the first six years,” he said.
“Sepang Mekar will be given a rent-free period for PJ Palms for the first year, which is an international industry practice to help them cope with the revamp and upgrade period.”
After the first two terms, Yeoh said renewal of the agreement is subject to rental rate review with the increment cap at 10% for each renewal.
“Sub-tenancy agreement details are negotiated between Sepang Mekar and the sub-tenants. The MBPJ will not interfere in that unless there is a breach of the agreement by Sepang Mekar,” he said.
“The main terms and conditions of the tenancy had been recommended by the MBPJ PJ Palms Sports Centre Project sub-committee, and approved by the MBPJ Committee for Economic Development, Privatisation, Industry and Investment, and endorsed by the MBPJ Full Board.
“The entire exercise in handling the PJ Palms project was done in an open and transparent manner,” said Yeoh.
“Proposals were called for via open bidding. Of the half dozen or so proposals, Sepang Mekar’s was the most advantageous to the MBPJ and it offered only family-friendly facilities.”
Yeoh said the detailed negotiations and drafting work were carried out over a period of many months and the MBPJ was advised by the legal firm of Messrs Chooi & Co.
“The terms obtained for this tenancy are far superior to the terms in the demised tenancy which we had refused to renew as the level of maintenance of the premises was considered not up to the mark and our firm conviction that council premises should no longer be used for any form of gaming,” he said.
Yeoh added that as part of the agreement, the swimming pool rates at the club must be approved by the MBPJ.
In the agreement, the proposed rates are as follows: RM4 and RM5 for adults on weekdays and weekends respectively, RM2 and RM3 for senior citizens above 55 and children below 12 on weekdays and weekends respectively, and RM1 for people with disabilities on both weekdays and weekends.
“One of the issues raised recently was the distribution of some leaflets advertising a RM8 rate for using the pool during peak hours at night, which is a matter that the council will check on,” said Yeoh.
“The MBPJ will ask the PJ Palms management to update the committee on the progress of the project.
“We will mediate and act if the head tenant acts unfairly or does not adhere to the agreement.”
Fernandez said the MBPJ was getting a good deal because the community would be getting first class facilities costing RM4.2mil and the MBPJ was collecting RM15,000 in monthly rental.
“If the tenancy is terminated or expires, the RM4.2mil capital renovation will belong to the MBPJ without any compensation,” he said.
“The whole idea is to bring back facilities to the public. The previous tenant was operating a gambling den in a public facility. Sepang Mekar is restoring the centre with a first-class pool and several sports facilities.”
Noting the controlled swimming pool rates, zero gambling element and RM4.2mil investment, All-Petaling Jaya Residents Association Coalition (Apac) chairman Johan Tung Abdullah said: “As far as Apac is concerned, the swimming rates are reasonable and the rental for sub-tenants is strictly a commercial decision issue that must be left to market forces without interferences from any politicians.
“APAC is happy that the MBPJ now collects three times more rental from the new operators, and at the same time has new and better facilities for PJ ratepayers.”
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