Teemo's palace sits atop a mesa with the rest of Mos Shuuta around it.
Teemo was arested by Jabba the Hutt after a crew of x-employees sold him out. In return for the eveidance collected against Teemo (and future services), Jabba gave the palace to the crew.
Teemo's palace underwent some major remodeling after Teemo was relieved of it. The gladiatorial pit in the center was covered over making a large open floor in the throne room. The Gladiators cells where expanded and updated for use as a barracks and a small cave was turned into a hanger bay in the side of the mesa below the palace landing pad.
After Teemo's arrest by Jaba, the rebel alliance used the "lower levels" of the palace as a safe house, while the crew of Teemo's x-employees operated ships repair and upgrade service above.
Recently the alliance has begun moving its assets out of the palace.