South Road Properties: A gamble that paid off handsomely

SHOOTING STRAIGHT By Valeriano Avila
Monday, September 29, 2008

By now, everyone in Cebu already knows that Filinvest Land Incorporated (FLI) has virtually closed a humongous P80 billion deal with the City of Cebu to acquire around P50 hectares of land at the controversial South Reclamation Properties (SRP). I say controversial because it just had too many critics and oppositionists who believed that Cebu City Mayor Tomas Osmeña was wrong in committing the City of Cebu into undergoing such a gargantuan project. I can only say that most of the critics of hizzoner couldn’t think past their small minds.

Just a few weeks ago, Barangay Tinago Councilman Joel Garganera dared Mayor Osmeña to resign if the City would not sell a portion of the SRP and consequently, he too would resign if the Mayor sold something in the SRP. Well, I’m willing to bet that Mr. Joel Garganera would never resign because he can always find excuses like, this challenge was never perfected nor agreed by both parties. But if he is truly a gentleman, he would resign because his challenge was made in public! But then, who cares if he quits or not? Small minds truly cannot fathom bigger minds.

While this big news was heard by the Cebuanos only in last Friday’s headline, last Sept.16, we already made this announcement in this corner, though it was still considered “unofficial”. But that’s the job of columnists to find out anything that’s happening in our locality and report it before it becomes breaking news. So before you read another breaking news early next month, let me just say that there are two other hot deals coming to the SRP, which promises us that the growth and development of Cebu City would more or less be assured in the decades to come.

But that’s not all! The SRP totals around 300 or so hectares of reclaimed land and the FLI deal would only develop 50 hectares. When FLI’s development starts, you can bet your last centavo that the property value of the SRP would increase tremendously especially for the remainder of the property. When this deal is signed, sealed and delivered, Mayor Tomas Osmeña can retire from politics with a grin, that he was able to pull off one of Cebu’s greatest gambles called the SRP! Though we are all elated by this news, it is no time to gloat. There’s still a lot of land out there that need to be developed before we can rest on our laurels.

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Nalzaro: Nothing yet to rejoice about (South Road Properties)

By Bobby Nalzaro
Monday, September 29, 2008
Saksi

CITY officials should not rejoice yet on the unsolicited proposal of Filinvest Land Inc. (FLI) to put up a multi-billion investment at the South Road Properties (SRP) because proposals are still proposals. It can be pursued or scrapped if things go wrong, especially when it involves a government transaction and where every detail is reviewed thoroughly.

The FLI proposal is just like a man proposing marriage to his girlfriend. Until they walk down the aisle and sign a marriage contract, everything is up in the air. Mahulog pa man gani nang mumho nga naa na sa baba, kana pa kahang business transaction.

Filinvest, one of the biggest developers in the country, is proposing to develop a 50-hectare portion of the SRP with 10 hectares in outright sale and 40 hectares in joint venture with the Cebu City Government. The developer plans to put up high-rise buildings, an ultra high-end residential area, a medical facility for retirees and other infrastructures.

In a joint venture agreement there are procedures and regulations that need to be followed. The government watchdog, Commission on Audit (COA), should be actively involved in the process to determine if the transaction is not disadvantageous to the City Government and perhaps some brilliant legal minds should also be consulted to avoid legal implications in the future. What if a taxpayer or any individual for that matter sabotages the transaction by going to court, delaying the entire process?

City Hall officials should be reminded about their own undertakings in stopping the joint venture agreement of the Provincial Government and that of a China-based consortium to develop the Capitol-owned lot in Banilad into a high-end residential area called Ciudad Sugbo. The project has been put on hold after the Cebu City Council passed an ordinance stopping the development in the area until traffic problems are solved. The council, I presumed, was acting on the orders of Mayor Tomas Osmeña because he and Gov. Gwen Garcia are at odds.

Basin baya ang taga City Hall maoy ma-unay sa tari. I am for sure by now Tomas critics on the SRP are already mapping out plans to “sabotage” the forthcoming deal. We might be shocked one day that a taxpayer has gone to court questioning the deal, or perhaps the losing bidder because the FLI proposal is still subject to challenge by any other interested entity before a bidding is conducted.

What about Tinago Barangay Councilor Joel Garganera and his cohorts going to court? What will be the cause of action? Well, money and politics are enough bases for a cause of action. I remember a lawyer-friend who told me about his story. He was asked by his client to file a case against the latter’s business partner. So, he did.

When my friend and the lawyer of the other party incidentally met at the Palace of Justice building, he was confronted by the lawyer. “Pataka man lang kag pasaka ug kaso sa akong kliyente Pañero nga wala man toy cause of action ang imong kaso.” My lawyer-friend fished his wallet out of his pocket, which was filled with huge bills and showed it to the lawyer and remarked, “kini diay (pointing to the money in his wallet) dili ni cause of action.”

My friend Joel Garganera should not worry. I am sure that until the end of the year this proposal by FIL will not materialize. Tomas and other city officials should show first the Cebuanos the color of the FLI check or money before we start rejoicing. And that certain Joel Marie Yu, Tomas’ top agent on the SRP, should stop bragging and talking about this transaction as not to waste his saliva. Ug ang mga sugarol pay pasultihon layo pa ni sa tinai sa manok. Nagbuwa lang na imong laway, Mr. Yu.

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Garganera To Resign ( South Road Properties)

Former Tinago barangay captain Joel Garganera, who is now a councilman, said that he will really resign from his post if the city can sell a portion of the SRP before the year ends.

Gargagera, a staunch critic of the mayor, dared Osmeña to resign from his post if he could not sell a single lot at the SRP by the end of 2008. Likewise, he said that he would quit if there would be a sale.

With the offer of FLI, Garganera’s days as barangay councilman might be numbered as he said that he will be true to his word.

“I will stand with my words even if the mayor did not bite my challenge,” Garganera said, adding that he was happy when he heard the news that FLI will be investing in the SRP.

“Don’t get me wrong. I am happy. But before I will resign, I will personally congratulate Mayor Osmeña ug basin tingali maka-abot pa ko og Pasko sa dili pa ko mo-resign,” Garganera said.

Garganera expressed concern about the huge payments the city is making for the SRP loan.

Although he was happy with the latest development, Garganera advised the company to carefully study and be aware of the legality of the SRP.

“Ganahan pud ta motan-aw sa terms and conditions. Kung mobayad ba dayon ang Filinvest or unsa nga pamaagi, di ba? Katungod pud sab tingali nato isip lungsoranon,” Garganera added.

Last March 2007, Garganera asked the court to stop Osmeña, the city council and the CIPC from marketing or leasing the 290-hectare SRP.

He also had said that Proclamation 843, which transferred ownership of the SRP to the City, was invalid because it lacked congressional approval.

But two months later, a Cebu judge said he found no basis in Garganera’s lawsuit to issue a temporary restraining order against Cebu City’s transactions to develop the SRP.

FLI Vice President for Visayas and Mindanao Projects Tristan Las Marias said that they plan to put up hotels, condominiums, a corporate headquarters and hospitals in the 50 hectares they are proposing to develop.

Las Marias said they have already expressed intention of investing at SRP four years ago, but it the process was quite long as the city was still studying what to do about it.

Las Marias said that if their proposal will be approved, the project will be done in phases. They are planning to put up five to eight buildings once they get the nod of the city.

He said that they are targeting the international market for the project that is estimated to cost at least P80 billion.

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City hopes to draw more investments ( South Road Properties )

By Jessica Ann R. Pareja Garry B. Lao
Saturday, September 27, 2008


A day after receiving a formal offer from Filinvest Land Inc. to develop 50 hectares of the South Road Properties, the City of Cebu continued pushing the SRP to potential investors.

Mayor Tomas Osmeña along with Joel Mari Yu of the Cebu Investment and Promotions Center (CIPC) showed to delegates of the 2008 National Developers’ Convention and Exhibition at the Marco Polo Plaza Hotel what Cebu has to offer.

Yu highlighted the SRP as Cebu’s centerpiece for development.

Osmeña also pointed out that the city did not make a master plan for the SRP as this would be a “fixation.”

He said that the city has to be flexible with regards to this project so that it can go along the needs of the investors.

“The world is changing, so our thrust is to be as flexible as possible,” said Osmeña.

FLI plans to buy 10 hectares from the city and develop and additional 40 hectares in a joint venture.

Osmeña said that the city would be in a better position to earn more from a joint venture since it will get a share from the gross proceeds and not only of the profits.

“Whether they make a profit or not, we will get the portion of their sale. By this, there will be no discretion and less corruption,” Osmeña said.

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Tom changes stance, is open to mall in South Road Properties

By Marian Z. Codilla
Cebu Daily News
First Posted 09:13:00 09/27/2008

With Filinvest Inc. (FLI) dangling an P80 billion development plan, Cebu City Mayor Tomas Osmeña had a change of heart and said he is now open to the idea of having a mall within the South Roads Properties (SRP) area.

Osmeña said a mall can cater to the needs of future occupants of the hotels and condominiums proposed by FLI and can somehow complete the facilities within the reclamation area.

The mayor previously opposed the establishment of a mall within the SRP, saying its presence may cause small and medium stores within the downtown area to close shop.

Osmeña said malls don't create more jobs and its employees don't receive big salaries.

Now, the mayor said he is entertaining proposals and may even include SM on the list of priorities.

“Someday, there will be room for a mall...to address the needs of those who live in those residential units. We will consider it just to make it complete,” he said.

Aside from a mall he said a dock for ferry boats may be placed in Kawit Island to complete the facilities in SRP.

Osmeña said Ocean Jet expressed interest in the project.

FLI's P80-billion investment in the SRP include developing a 51-hectare property under a joint venture (JV) with Cebu City.

The real estate company also said it will purchase 10 to 12 hectares of land within that area worth P2 billion.

FLI is also planning to build medium to high-end high complexes of commercial spaces, hotels, condominium units and retirement facilities.

Under the JV arrangement, the Cebu City government will get at least 10 percent of the sale or lease of the building located within the area.

FLI's proposal has yet to undergo public bidding but already some Cebu City officials find it attractive.

Cebu City Vice-Mayor Michael Rama said they still have to listen to other proponents.

City Councilor Sylvan Jakosalem also said the proposal looks good.

“Seems like this proposal won't have any swiss challenge the way it looks. It sounds so beneficial to the city,” Jakosalem said in a text message sent to .

“Don't think any other developer can match this,” he added.

Along this line, Osmeña said the absence of a standard master plan for the South Road Properties (SRP) will attract investors to develop portions of the reclamation area.

Osmeña said there should be no competition among investors within the reclamation property because it would affect the city's interests to get as much profit in the joint ventures it will undertake with the winning bidder.

“There is no standard master plan but we do not allow direct competition,” Osmeña said.

“Why would we create competition for ourselves?. If it is a JV, we want the prices to be up and if there is a competition the prices will fluctuate,” he added.

Osmeña said that contrary to the claims of critics, a master plan would not be a good idea since the city wanted to “be flexible” and maximize the value of its property by entertaining the proposals of interested investors.

“The thrust is to be as flexible as possible. Maybe our master plan is to be the first to adjust to those who have good plans for the city. If you have a master plan you are stuck,” he said.

According to Osmeña, the Cebu City government cannot turn down proposals just because it is not within its master plan.

The mayor said the city's master plan for the SRP will focus on the installation of utilities like cooling, power and water distribution systems and transportation to the establishments.

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Bid offered on 50-hectare South Road Properties lots

Friday, September 26, 2008
By Linette C. Ramos

CEBU CITY -- Four years after it started paying for the loan, the Cebu City Government received the first offer to develop a 50-hectare portion of the South Road Properties (SRP), including an outright purchase of 10 hectares worth P2 billion.


Filinvest Land Inc. (FLI) submitted to Mayor Tomas Osmeña Thursday night its unsolicited proposal to undertake a joint venture agreement with the City, where the latter will get at least 10 percent of FLI’s gross sales every year.

FLI will invest at least P80 billion in the project, which will include “mid-level to ultra high-end” residential buildings, a medium-rise complex, a cluster of high-rise hotels, retirement and medical facility and commercial areas, said Tristan Las Marias, the firm’s vice president for Visayas and Mindanao.

It also pledged to bring several corporate headquarters to the SRP.

“Given the potentials of the SRP and the business-friendly environment in Cebu City, Filinvest is proud to make an unsolicited proposal for an integrated and master planned development of a 50-hectare portion of the SRP under a joint venture agreement,” Las Marias announced Thursday night.

With the P2 billion projected income from the outright purchase of 10 hectares, the City will have enough funds to pay for more than half of the balance of the loan principal.

The amount, though, will be paid in installment for a period of four to five years.

The City has a balance of some P3.3 billion for the principal of the loan made with the Japan Bank for International Cooperation (JBIC) for the SRP, excluding interests and guarantee fees.

FLI vice chairman Andrew Gotianun Jr. flew to Cebu Thursday to present their proposal to Osmeña, Vice Mayor Michael Rama and the city councilors at the Casino Español de Cebu.

The project will cover some 11.26 hectares of seafront property, prime lots along the South Coastal Road and some interior lots.

Timetable

Although the submission of the proposal is only the first step, the Cebu Investments and Promotion Center (CIPC), the marketing arm of the SRP, hopes to award the project before the year ends.

“This will entail a very detailed activity of evaluating the proposal. If everything goes well, by the end of the year, we will be able to award the project,” CIPC managing director Joel Mari Yu told a press conference Thursday night.

The procedures, however, could take longer than three months.

Yu explained that the proposal, which includes the project proposal and the contractual arrangement, will now be evaluated by the City Government.

Osmeña said the evaluation of the proposal will be “fairly fast” if it is found consistent with the City’s guidelines for joint venture agreements.

If it is acceptable to the City, the proposal will go to the City Council for further review and ratification.

Once approved, the proposal will be offered to the public for the unsolicited bid challenge using the Swiss challenge model.

Challenge

“This means that other developers can challenge FLI’s offer and if the challenger comes up with a proposal that is superior to the original proponent’s, we can ask FLI to match that offer. And if they are not willing to match it, then it goes to the highest bidder,” Yu said.

Interested developers will be given 90 days from the date of publication of the bid to submit their proposals.

Osmeña said, though, that the City will be selective with the challengers.

“While this is open for other developers to challenge, only qualified investors of the same stature and magnitude as (FLI) will be allowed to bid. We will not allow some developers from Samar who want to challenge it to come in. It has to have the same background and track record as (FLI),” he said during the press conference.

The SRP has so far cost the City some P2.76 billion in loan payments, interests and guarantee fees paid to the JBIC and the National Government.

Break

Since its construction began in 1997, the project hit some snags, including delays in the titling as a result of the adverse claims of a portion of the SRP by the Talisay City Government.

The proposed joint venture agreement allows profit-sharing, and a sharing of investment risks at the same time, the mayor said.

“A joint venture simply means partnership. There will be a sharing of profits and the sharing of risks… Under a joint venture, the profits are usually divided but in this case, we are just getting a percentage of the sales, basically 10 percent of the gross sales,” the mayor explained to the media and the City officials.

“Whether or not (FLI) gets profit, we get 10 percent of whatever sales they will get from building units, and we are guaranteed a minimum repayment of the sale price of the lots, plus, plus,” he continued.

Osmeña also guaranteed that the project will take off before his term ends in 2010.

No mad dogs

“And I guarantee you there will be no irong buang (mad dogs) at the SRP,” he said in jest, apparently referring to Capitol officials’ taunts that only rabid dogs are interested in the SRP.

Las Marias said they wanted to invest in the SRP four years ago yet, but the City still did not have the titles to the property, and it was still getting clearance from JBIC, the National Economic and Development Authority and the Commission on Audit.

When asked how long it will take FLI to complete the project, Las Marias said it may go on for many decades, depending on market demands.

If they win the bidding, FLI plans to start construction of the first phase immediately after the awarding of the contract and as soon as they get the permits from government agencies.

The seafront area will be the project’s main attraction and the selling point of the development.

“Everything will be market-driven. Even for the first phase, which will involve five to eight buildings, we don’t know how soon it will be completed. It will depend on what the market wants,” he said.(Sun.Star Cebu)

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