CH gives go-signal to FLI’s P25-B proposal; officials still mum on Capitol’s bid (South Road Properties)

Linette C. Ramos
Sun.Star Staff Reporter

FILINVEST Land Inc. (FLI) will infuse a total equity of P25 billion, not P80 billion, in the joint venture with the Cebu City Government to develop a 50.6-hectare portion of the South Road Properties (SRP).

Even with limited details on the results of the negotiations between FLI and the City’s Joint Venture Selection Committee (JVSC), the City Council authorized the committee yesterday to proceed with the publication of FLI’s proposal, and to invite private entities to challenge it.

The special council session did not answer questions on whether local government units like the Provincial Government will be allowed to participate in the competitive challenge.

The council’s authorization to publish will allow the JVSC to collect P250 million from FLI later this week, before the invitation to pre-qualify and to submit a comparative proposal is published on Dec. 4 or 5.

City Administrator Francisco Fernandez said last night that FLI committed to invest an equity of only P25 billion for the project, as specified in the pre-qualification requirements.

FLI committed to construct 875,000 square meters of building space through an unincorporated joint venture with the City over a 20-year period, covering 50.6 hectares of land.

High-end medium and high-rise condominiums, office buildings, a retirement facility, commercial and recreational areas will be put up at the prime waterfront lots and properties along the South Coastal Road.

“The equity that they are committing is P25 billion. They only need to raise P25 billion to start the project and mao ra na ang ilang patuyok-tuyokon and at a certain point, it will reach P80 billion. So P25 billion ra sad ang kinahanglan sa mga challengers ana,” Fernandez told Sun.Star Cebu.

During the session, Councilor Nestor Archival asked the JVSC whether or not local government units will be allowed to participate in the joint venture, considering that the ordinance prescribing the joint venture guidelines covers only private entities.

“We would rather not comment on that. We will wait if there are proposals from local governments and if there are, I think that is when they would tackle it and consult legal luminaries and the city council. Until the deadline for the submission of proposals, it would be better if the JVSC refrains from commenting on that controversial matter,” Fernandez said.

A prospective challenger, the Cebu Provincial Government, did not attend the session.

‘Director’

“I am sure it (Filinvest presentation) will be covered by the media. We will make our reactions to the proposal after the meeting,” said lawyer and Capitol information and revenue generation consultant Rory Jon Sepulveda.

The Province also hit back at Mayor Tomas Osmeña, for saying that the Capitol cannot direct the affairs of the City Government, particularly in negotiations for the sale of SRP lots.

“At any rate, para sa Kapitolyo, we know that we cannot direct the city. There is only one director for the city and he’s doing his direction now through the use of his cellular phone. We don’t wish to become a director,” Sepulveda told a press conference.

Osmeña was reacting to the statement of Rep. Pablo John Garcia (Cebu Province, 3rd district) that the sale should be done through a competitive public bidding, and not a Swiss Challenge that violates the Local Government Code. He has also said the purchase of 10 hectares should be handled separately from the proposed joint venture to develop 40 hectares.

Sepulveda criticized a statement from the “director from Texas” that the City is simply following the National Economic Development Authority’s (Neda) guidelines on the
sale of SRP lots.

“Unfortunately, the director from Texas is not a lawyer. I’m telling him now he’s wrong. These Neda guidelines are not applicable to a local government unit,” he said.

Review

Businessman Crisologo Saavedra, who attended the presentation at the council session, said he will scrutinize both Filinvest’s proposal and the Provincial Government’s challenge.

“This is for the good of the Cebuanos and as part of my advocacy against corruption,” said Saavedra, who has filed cases at the Office of the Ombudsman to question allegedly anomalous government transactions.

At the session, Fernandez also told the council that FLI committed to compensate the City over a period of 20 years, including a minimum payment of P1.5 billion in cash, payable within the first three years.

In the joint venture component covering 40 hectares, FLI will also give the City 10 percent of the gross revenues from built condominium units, or a predetermined minimum guaranteed return, whichever is higher.

Fernandez did not disclose to the council the minimum guaranteed return, as the information would be made available only after the eligible bidders have been selected.

“If they are not able to sell any unit, then we get a minimum guaranteed return, which shall be over and above the price of the lot. But if they are able to sell, then we get 10 percent of their sales. This is what we are now offering to the public, for other private entities to challenge,” he told the council.

Ownership

Fernandez also assured the council that the City will remain the owner of the lot covered by the joint venture and that Filinvest will not be allowed to mortgage the property until it has fully paid for the lots through the annual share of the gross sales.

The JVSC will publish the invitation to bid in major local dailies twice, either on Dec. 4 or 5 and once more seven days after that.

The deadline for submission of eligibility documents is on Dec. 18, while the deadline for the submission of comparative proposals is 30 days after.

As stated in the pre-qualification requirements, any individual, partnership, corporation, firm or consortium, whether local or foreign, may participate in the competitive challenge.

Among other eligibility requirements, the prospective bidder or its affiliates should have at least 25 years of experience in real estate development in the country, and completed and developed a contiguous project of at least 35 hectares for a commercial business district costing at least P10 billion.

Since the minimum amount of the equity needed for the joint venture is P25 billion, the prospective bidder should be able to prove that it has access to an equivalent amount of capital.

If the bidder is a corporation, it must be a publicly listed company in the Philippine Stock Exchange and should have a stockholders’ equity of at least P20 billion. (With GMD & RHM)