South Road Properties (SRP) - Articles: January 2009

City has no hand in FLI development (South Road Properties)

THE Cebu City government could not dictate what development Filinvest Land Inc. (FLI) will implement in the 10.6-hectare reclamation area it bought at the South Road Properties (SRP).

Joel Mari Yu, managing director of the Cebu Investment Promotions Center (CIPC), the SRP marketing arm, assured that the city can get the promised P1.5 billion cash within the first three years.

The joint venture agreement between the city and the Filinvest covers two properties: an outright purchase of the 10.6- hectare known as Pond F and the development of another 40 hectare property under a profit sharing arrangement with the city government.

Since the 10.6 hectare property was directly bought by the FLI at P15,000 per square meter, then the city does not have any right to direct whatever development it wants to undertake.

According to Yu, this property will be known as FLI's “self development” project wherein the city would only depend on its development proposal.

The Joint Venture (JV) contract states that FLI will “develop the sale properties into a modern urban center consisting of residential, office, commercial, hotel and leisure buildings, and a public promenade.”

While the other property, which is under a profit – sharing arrangement with the city, will be developed into an “integrated and well–planned clusters of medium rise residential buildings for condominiums and hotels, and a portion for an IT building.

Aside from the sale of the 10 hectare, the city can also get either a minimum guarantee of return or a 10 percent of the gross sales of the building spaces being sold, whichever value is higher.

“I am the one who negotiated. I know the city can survive within the first three years, and I know we can get the P1.5 billion in the first three years,” Yu assured.

REPORTER MARIAN Z. CODILLA AND CORRESPONDENT JULLY VENUS CUIZON

City Council ‘has authority’ to examine contracts and, if necessary, change its provisions (South Road Properties)

THE Cebu City Council may still amend the draft joint venture agreement with Filinvest Land Inc. (FLI) if it finds anything wrong with the contract, Acting Mayor Hilario Davide III said.

But at this time, Davide said it is still early to comment on the details of the contract since the councilors have yet to finish reviewing the 27-page draft joint venture agreement to develop a 50.6-hectare area of the South Road Properties (SRP).

He told reporters yesterday that they recognize the importance and enormity of the P25-billion contract that is why they are taking their time to review it. He even called for a special session on Monday so they can discuss the contract in detail.

City Administrator Francisco Fernandez earlier said that under the City’s Joint Venture Ordinance, the council will only authorize the mayor to enter into and sign the agreement with FLI.

Yesterday, though, Davide said they are mandated by law to go over the contract, and amend it if needed.

“Under the law, any contract to be signed by the chief executive is subject to the City Council’s approval. It implies that the council has the authority to go over the contract, to make sure it conforms with the law and is legal,” he told reporters yesterday.

Possible

When asked if they can still amend the contract if they see any provision that would be disadvantageous to the City as pointed out by Tinago Barangay Councilor Joel Garganera, he said that it is possible.

“Some say that the council’s action is ministerial but that does not prevent the council from going over the contract and changing it. There had been cases in the past when the contracts were changed... Any amendment is a possibility. But if everybody finds na maayo ang contract, then why change it?” said Davide, the council’s presiding officer.

Garganera, a known critic of the SRP, earlier said that the FLI proposal, if approved, would be “grossly disadvantageous” to the City because of the limitations of the profit-sharing scheme.

Acting Mayor Michael Rama told a news conference yesterday that Garganera is welcome to comment on the contract, which he said should be considered by the council.

The barangay councilor said the public seems to have been misled because when FLI and the city officials first announced the firm’s unsolicited proposal, P80 billion worth of investment was promised.

“But they changed that. The contract is now only P25 billion with an annual payment of only P250 million a year for six years. They keep on saying wala na’y problema sa pagbayad sa utang (there’s no more problem with the loan payments), but what is P250 million a year when the City is paying some P800 million a year for the SRP loan?” he said.

Garganera also questioned the extended payment period for the 10.6-hectare waterfront area that FLI will purchase for P1.59 billion.

He pointed out that in the invitation to pre-qualify and to submit a comparative proposal, the amount was supposed to be paid within a period of only three years.

But in the draft contract, FLI will be allowed to pay for the Pond F lots within six years, at an annual installment of P250 million a year.

He also said that some provisions of the contract are disadvantageous to the City because it will not be able to maximize its share of FLI’s revenues.

The contract states that the City will get a 10-percent share only from built-up space in the 40-hectare area, where medium-rise residential buildings and retirement and congregate care complexes will be constructed.

The 10-hectare Pond F that FLI will buy will be developed into a modern urban center with residential, office, commercial, hotel and leisure buildings and a public promenade.

Garganera pointed out, however, that the City’s 10-percent share from FLI’s gross sales of built-up space is not applicable to the 10-hectare area, where the buildings with high potential revenues will be built.

FLI had committed to build 875,000 square meters of building space in the 50.6-hectare properties.

“I am not a real estate expert but I think everyone knows that in constructing 875,000 square meters, most of the space will go to the hotels, high rise condos and office
buildings, which will all be in the Pond F area where the City’s 10-percent share will not apply,” Garganera had said. (LCR)

Scrutiny urged over South Road Properties contract

By Marian Z. Codilla, Reporter

A critic of Cebu City’s transactions over the South Road Properties (SRP) has questioned the joint-venture contract that City Hall signed with Filinvest Land Inc.
Tinago barangay councilor Joel Garganera said he wanted more scrutiny over the contract. He questioned the contract’s legality and as well as City Hall’s transparency in handling the contract, which is now pending with the City Council’s committee on laws.
“The public has to know (the details of the contract) as well because if they are not going to deliberate on the contract very well... it is not far fetched that there might be someone who will file a case. But I am not saying it’s going to be me,” Garganera told Cebu Daily News.
Garganera attended the council’s regular session last Wednesday on the hopes that the contract would be discussed, but was disappointed that the matter was not raised.
He said he then visited the City Secretary’s Office to get a copy of the contract, but was denied.

He said he would have wanted to scrutinize the contract himself as a “concerned citizen.” He wondered how an initial offer of P80 billion worth of developments for a portion of SRP went down to P25 billion.
Garganera also cited inconsistencies between the published invitation to challenge the Filinvest contract on Dec. 8 and Dec. 15 last year and stipulations in the contract.
The invitation sated that one of the commitments of Filinvest is to give the city a minimum of P1.5 billion in cash payable within the first three years for the sale of a 10.6-hectare seafront property at the SRP.
The contract submitted to the City Council stated that Filinvest, upon signing of the contract, will pay P348 million as first payment and the remaining balance will be payable in six years with a five percent interest every year.
Garganera also wondered if Filinvest’s development plan was economically advantageous to the city since Tristan Las Marias, Filinvest Vice President for the Visayas and Mindanao, said the company was going to build hotels, office spaces, and condominiums on what Garganera described as the “Crown Jewel” area of the SRP, while only medium-rise commercial buildings and a retirement facility would be constructed on the 40 hectare joint venture property.
“Filinvest has the prime lots, all their properties are surrounded by bodies of water and the cost of such properties must be very high. Why is it that only medium-rise buildings are going to be built in the joint venture (agreement)? The council should discuss the merits of the contract. If it is grossly disadvantageous to the city then it is illegal,” Garganera said.
He said he was worried that the city may not get a fair deal on the properties if the council would not be critical in discussing the contract.
Garganera said he did not mind what the administration thinks of his criticisms since he only wanted what is best for the city.
“They can always say it is politically motivated, then let it be. But this is economic in nature. The basic services are being neglected because of the debt servicing. I am only hoping that the council should discuss it properly and not to hurry this up. Basin dinha nata manguros kung nangilat na (Maybe we'll only make the sign of the cross once the lighting strikes),” he said.

Council committee looking into plan to donate South Road Properties lot

Cebu - The proposal of Councilor Jose Daluz for the city to donate a parcel of land at the South Road Properties to the University of the Philippines is now pending before the City Council committee on laws.

The proposal was referred to the committee during the council’s regular session last Wednesday to determine the legal implications of the proposed donation.

But while UP is leaving it up to the council to decide on the proposal, UP Visayas – Cebu College Dean Enrique Avila said UP is serious in expanding to the SRP.

“It has been our President’s desire that UP Cebu will be able to contribute to the development of the community that is why we accepted their proposal… For as long as we are offered, we will honor our commitment. If the SRP is not for us, we have nothing to lose,” Avila said.

Daluz’ proposal stipulates that the city will donate a lot to UP but the university has to build a separate campus therein within a specific period of time, otherwise, the donation will be declared null and void.

Another condition is for UP to bring to the SRP extension programs like Masters in Business Administration and other continuing education courses.

Avila admitted the condition puts a lot of pressure on UP but the university decided to accept the challenge because UP President Emerlinda Roman sees it as an opportunity to develop UP and a chance for the school to contribute something to the community.

Roman has reportedly started allocating funds for the project, as it is her priority as newly elected president to develop the university’s regional campuses.

“We were offered because the city believes that with UP at the SRP offering MBA courses, the city can attract more investors to be locators at SRP,” Avila said. — Jessica Ann R. Pareja/JMO (THE FREEMAN)

Abellanosa shoots down move to donate lot to UP (South Road Properties)

Cebu - The Cebu City Council referred to the committee on laws the resolution donating a lot at the South Road Properties to the University of the Philippines.

Councilor Rodrigo Abellanosa asked for reconsideration of the resolution – authored by Councilor Joey Daluz - that authorizes acting mayor Michael Rama to enter into a deed of donation with the UP for a parcel of SRP lot.

Abellanosa, who is a product of UP and owns the Asian College of Technology (ACT), said he doubts the capacity of the national government to provide funds to sustain the property.

He mentioned that UP has a six-hectare lot in Lawaan Dos, Talisay City that remains idle. The lot is now occupied by illegal settlers.

“I have no doubts in donating anything, but it is the capability of the national government in providing financial resources to UP, I asked the proponent (Daluz) to reconsider. Let us open talks with other universities like La Salle or Ateneo,” Abellanosa said.

After a minute recess, it was finally decided to have the resolution referred to the committee on laws.

The city is set to donate 51,372 square meters of lot located at Lot 1-G at the SRP to the UP on condition that the university will open masteral courses on management in its SRP campus so its graduates could serve to the locators at the properties. — Ferliza C. Contratista/LPM (THE FREEMAN)

FLI demands turnover of titles over 12 hectares of South Road Properties land

CEBU City Hall is preparing to pull out titles of certain portions of the South Road Properties (SRP) from the Land Bank of the Philippines, as the City Council starts reviewing the joint venture contract with Filinvest Land Inc. (FLI).

Among other provisions, the 28-page draft agreement requires the City Government to transfer absolute title, ownership and possession of a 12-hectare portion to FLI before it starts construction.

The City is also bound to give FLI a one-year business tax holiday as an incentive for being a pioneering investor in the SRP, and to impose real property taxes only on portions whose titles have been transferred in the name of FLI.

Once the contract is signed, the City will no longer have to worry about some of its SRP loan payments in the next six years, since the contract requires FLI to pay some P250 million a year to LBP, the conduit bank for the SRP loan.

The contract also provides that in the event of a suit, proceeding, investigation or other legal action questioning the City’s titles of SRP lots and its right to dispose of the sale and joint venture (JV) properties, “the City shall indemnify and hold FLI free from any and all claims, damages, expenses and liabilities arising therefrom or relating thereto.”

Any lawsuit related to the SRP titles or its disposal also gives FLI the right to suspend payments for the purchase of lots and the JV activities.

“Should any such pending or future suit, proceeding or action be decided adversely against Cebu City or result in a judgment affecting the City’s performance of its obligations, or which would prevent the transfer of the properties under the name of FLI…then FLI should have the option to cancel and terminate this agreement…,” the contract read.

Although the Talisay City Government and the Province had previously questioned the SRP titles and the bidding process, respectively, no formal complaint against the City has been filed in court so far.

City councilors were provided copies of the draft joint venture agreement between FLI and the City, which they tackled in yesterday’s council session.

Councilor Gerardo Carillo proposed to authorize Acting Mayor Michael Rama to enter into and sign the JV agreement, but his colleagues preferred to refer the contract to the committee on laws for further review.

And considering the “enormity” of the decision they will have to make, Councilor Augustus Pe Jr. moved to call for a special session on Monday so they can discuss the details of the contract.

In a phone interview last night, City Administrator Francisco Fernandez said the City will not have any problem complying with the contract, since the Land Bank of the Philippines (LBP) agreed to release some lot titles.

The SRP titles are mortgaged with the LBP for the City’s 12.315-billion yen loan from the Japan Bank for International
Cooperation (JBIC) when it undertook the reclamation project.

“We’re already working on the release of some titles. Even if we want to get the titles for 50 hectares, Land Bank will give it to us because anyway, we will be making additional payments when (FLI) gives a down payment. But we don’t need 50 hectares, we won’t need to get that much,” he told Sun.Star Cebu.

The draft agreement covers the JV to develop a 50.6-hectare portion of the SRP into a modern urban center consisting of residential, office, commercial, hotel and leisure buildings, which requires at least P25 billion in investment on the part of FLI.

According to the document, it involves FLI’s purchase of a 10.6-hectare area worth P1.592 billion, and the development by FLI of a 40-hectare area under a profit-sharing scheme with the City.

In the profit-sharing arrangement, the City is guaranteed a 10-percent share of the gross sales of built-up space, which will be remitted quarterly to the City.

For the sale of the 10.6 hectares, the City will get a down payment of P348 million within 30 days from the signing of the contract.

The balance will be paid in six years, or some P217 million to P269.5 million a year, with a five-percent interest per annum.

Titles for a two-hectare area will be turned over to FLI after each of the first four payments, which will be paid directly to LBP. (LCR)

Council sets special session to tackle contract for South Road Properties

Cebu - The Cebu City Council will hold a special session on Monday to discuss the Joint Venture Contract between the City Government and Filinvest Land Incorporated (FLI).

The city council will only give authority to Acting Cebu City Mayor Michael Rama to sign the contracts and documents on behalf of city after this session.

The letter of Cebu City Administrator Francisco Fernandez, Joint Venture Selection Committee (JVSC) head was only noted during the regular session yesterday.

Instead of pushing for its approval, Councilor Augustus Pe asked that it be referred to the Committee on Laws to look into the contract.

Committee on Laws chairman Edgardo Labella assured a report will be ready for discussion on Monday.

The letter asked that authority be given to Rama to sign the JV agreement and other contracts governing the relationship between Cebu City and Filinvest for the development of 50.6 hectares of land at the SRP.

Filinvest was finally awarded the project last Friday.

Filinvest will put up an investment of P25 billion for this project.

The Provincial Government attempted to bid for the same project, but was rejected twice by JVSC for reasons on lack of jurisdiction, lack technical expertise and lack of financial capability.

With the project awarded to FLI, Cebu City will not have to worry where to source the P300 million, which is its obligation to its creditor bank for the first quarter of the year.

FLI’s investment will accordingly total to P80 billion in 25 years. — Ferliza C. Contratista/NLQ (THE FREEMAN)

FLI eyes more projects (South Road Properties)

AS the global economic turmoil deepens, property developer Filinvest Land Inc. (FLI) continues to invest in ongoing and future projects in Cebu.

Louie Carandang, FLI business development officer, said two of the company’s ongoing projects are on time—the Grand Cenia Condotel and Residences in Cebu City and the Seascapes Resort Town in Lapu-Lapu City.

Both projects bank on Cebu being a tourism hub even while reports point to a slowdown in the travel market, as a result of the financial crisis that is affecting many major economies worldwide.

“It (tourism) is a cycle. It will recover later. We’re not scared about our investments, particularly in the Visayas and Mindanao,” said Carandang. He cited Department of Tourism figures that show Cebu would need about 400,000 to 500,000 hotel and resort rooms a year.

He said buyers of condotel units at Grand Cenia also see the same potential. “Our sales have not been affected by the crisis,” he added.

He pointed out that buyers of Grand Cenia are mostly foreigners or Filipinos with foreign income (like overseas Filipino
workers) “who are not so much affected” by the global crisis.

While Seascapes is considered “very high-end”—with lots priced around P15,000 per square meter and prices for condo units going up to as much as P9 million—FLI is confident the property will sell very well. Its target markets are foreigners and overseas-based investors.

Sold out

Carandang reported that all Seascapes lots have already been sold out within a year after the developer began pre-selling the property.

FLI, however, has decided not to sell shares to its club house that will feature a spa and sports facilities.

Carandang said FLI has seen the business potential of keeping the ownership of the club house and its amenities. He added that FLI might contact an international spa operator to manage the facility.

FLI is also confident about the success of its future projects: the One Oasis condo compound in Mabolo, Cebu City, which will be implemented this year; and its expansion of existing housing subdivisions in Lapu-Lapu City and Talisay City.

Cecille Canturias, FLI Cebu sales team head, said the company’s sales continue to go up. In 2000, its sales were only P30 million a year, which went up to P450 million in 2007 and P700 million in 2008.

“We have many repeat buyers, they buy condo units for investment,” she said.

Grand Cenia condotels are projected to earn P300,000 to P400,000 a year for the unit owner, which means “it will pay for itself,” said Carandang.

“FLI has been around for more than 15 years, surviving crises is nothing new to us. But we’re very prudent and in 2009, we will continue to be; but we will not sacrifice the quality of our products,” said Carandang.

He admitted, though, that to respond to the needs of its target markets, FLI has decided to develop products that are more affordable. He cited One Oasis, whose condo units will be priced from P1.4 million to P2 million.

He said One Oasis, which will be located near major malls and universities, will be ideal for new families and those with children who study in Cebu City.

To make it easier for buyers, FLI has also lowered the interest rates of its in-house financing program to 11.5 percent for the first years from P19 percent. It has also extended its low-interest rate period to 36 months from 18 months.

FLI will also invest in a 50.6-hectare mixed-use development at the South Road Properties of Cebu City in a joint venture with the City Government.

Acting mayor signs notice of award to FLI; council to review contract (South Road Properties)

CEBU City Acting Mayor Michael Rama signed yesterday the notice of award of the joint venture contract with Filinvest Land Inc. (FLI), but it will take at least one week before he is authorized to sign the agreement.

The Joint Venture Selection Committee (JVSC) endorsed to the City Council secretariat yesterday a copy of the draft contract on the joint venture project with FLI.

City Administrator Francisco Fernandez, chairman of the JVSC, said he also wrote the secretariat requesting the council to pass a resolution authorizing the mayor to sign a contract with FLI for a joint venture to develop a 50-hectare portion of the South Road Properties (SRP).

The matter will be tackled in tomorrow’s regular session, but he does not expect the council to approve it immediately, as it will still have to be reviewed by the council’s committee on laws.

In a phone interview yesterday, Rama said the city council knows that the joint venture project is an urgent matter, but he hopes they will also be reminded of the need for transparency.

He said it will be up to the council to take their time in reviewing the contract if they have to, saying he does not want to pressure the council into passing a resolution authorizing him to sign it.

“I don’t want to pressure the councilors. They know there is an urgency to this, but I hope they will not be pressured by that. Whatever it is, we have to be mindful of the importance of transparency,” Rama told Sun.Star Cebu.

Last Friday, the JVSC approved the notice of award of the contract to FLI, which will construct 875,000 square meters of building space in a hotel, high-rise condominiums, office buildings and medium-rise residential buildings spread across 50.6 hectares of land at the South Road Properties.

The P25-billion project will earn for the City some P350 million next month, and P250 million a year for six years as payment for the 10.6-hectare lot that FLI will purchase.

Another revenue source would be the City’s 10-percent share from the sale of properties in the remaining 40-hectare area, plus an undisclosed minimum guarantee.

Fernandez said yesterday said that depending on the council’s deliberation tomorrow, a special session may be called to discuss the joint venture contract.

“The contract will still be referred to the committee on laws. There might be a special session but that is the protocol; that it has to be studied by a committee. So I’m sure that it cannot be approved on Wednesday,” he said last night. (LCR)

Nalzaro: Capitol’s legal move (South Road Properties)

THE Chinese community is celebrating new year today. Aside from celebrating at home, some families will flock to various Chinese temples for a bigger and more colorful celebration and to offer prayers. Like, our New Year, the Chinese New Year was also greeted with a big bang before midnight last night.

A traditional dragon dance will be held at the downtown area where majority of establishments owned by Chinese businessmen are located. Decorations are usually in red. Establishment owners will also distribute money wrapped in red envelop, called angpao, to performers. To our Chinese friends, Kung Hei Fat Choi! I hope the Year of the Ox will bring progress and prosperity to all of us.

******

So Cebu City Hall has finally awarded Filinvest Land Inc. the right to develop a 50-hectare portion at the South Road Properties (SRP), 10 hectares of which is an outright sale while the 40 hectares is a joint venture. This after the joint venture selection committee and acting Mayor Michael Rama denied the appeal of the Provincial Government that challeges Filinvest’s unsolicited proposal.

What is now needed to formalize and legalize the deal is a City Council resolution authorizing Rama to enter into a contract with Filinvest. Once sealed, City Hall will receive several millions as advance payment. This will solve the financial woes of the City Government, brought about by the debt-servicing to the Japan Bank of International Cooperation, which financed the development of the multi-billion peso SRP project.

But it’s too early for City Hall and Filinvest to rejoice, as there might be some legal hitches in the days to come. I can only surmise that as of this time, Capitol legal minds are mapping out some legal plan to stop the deal. While the transaction was still with the joint venture selection committee, Capitol lawyers had already raised some legal questions that might be their basis in going to court.

If the Capitol decides to go to court, of which I am almost one hundred percent sure, we can expect a protracted legal battle.

If there is a pending case, or worse, if the court issues an injuction, the project cannot commence on time. That will also delay the payment by Filinvest to City Hall. If I were Filinvest, I will not release any amount due to the uncertainty of the project. What if the court declares the contract illegal? There have been several government transactions, which were declared illegal.

Again, I may sound like a broken record but I have a long suspicion that the Capitol’s move to challenge the Filinvest proposal is just a strategy so they can acquire a legal personality to intervene in the deal. Because if they do not show interest and just go to court, they can be accused of politicking. Now, they have that “window of opportunity” to question the deal because they are already part of it.

Capitol owns vast properties that are ideal for development. Why the sudden show of interest in the SRP? And why be interested in the lots that Filinvest wants to develop? It’s plain and simple; sabotage. The SRP covers 300 hectares. And if the Province is really interested in developing there, why not just ask City Hall for another portion?

I have said this before and I will say it again. Capitol will only stop harassing City Hall and Filinvest with a barrage of legal suits if the City Council lifts or repeals the resolution prohibiting a Capitol development in the Banilad area. With the lifting of that resolution, the Province can start its multi-billion peso Ciudad project in consortium with a China-based company.

Capitol should not wait for a change of leadership at City Hall before negotiating to pursue the Ciudad project. As what I have been saying, as long as Tomas Osmeña is alive he will always be calling the shots at City Hall, especially if his replacement is a political ally. Kana si Mike Rama ug mamayor na mora ra unya na siyag tawo-tawo sa humayan. Believe you me. Tsur gyod ko ana.

City gov’t mulls security cameras for South Road Properties, streets

By Jully Venus Cuizon, Correspondent

DESPITE the likelihood of being labelled as copycats, Cebu City officials are considering to install security cameras in some city streets and the South Road Properties (SRP).

In a text message to , Cebu City Mayor-on-leave Tomas Osmeña said he doesn't mind if they were accused of imitating Capitol's program of installing security cameras so long as it aids in ensuring security within the City Hall premises.

"Copying is not an issue as long as it helps the security, is reliable and not overpriced,” the mayor said.

City Administrator Francisco Fernandez also echoed his boss's sentiments, saying “imitation is the greatest form of flattery."

The city government recently installed security cameras at the City Hall executive building for security purposes and to monitor the movement of employees.

Not a few supported the move, saying this would prevent theft within the premises.

City Councilor Roberto Cabarrubias said security personnel stationed at the command center can monitor who among the employees are slacking off and report them to the Human Resources Office.

Cabarrubias, who chairs the committee on information and technology, said the office can then recommend the sanctions to be imposed on the erring workers.

"We want our employees to feel that they are being watched if they are serving are public well," he said.

He said guards stationed at the command center will also be told to coordinate with the security personnel assigned at City Hall for monitoring any suspicious activities. Cabarrubias said they still have to train the security officers.

"The recording of the videos from the security cameras is 24 hours and even if there are brownouts, they are still recording because it has a generator of its own,” he said.

Cabarrubias said the software for the cameras can send alarms to the security personnel at the command center.

He confirmed that plans are underway to install security cameras at the street intersections and the SRP.

For his part City Planner Paul Nigel Villarete said the presence of security cameras is intended to ensure good governance and does not violate privacy.

"If security cameras are placed in public areas, then that's a public function. Why would anybody feel violated when you are in a public place, unless there's something to hide?," he said.

SRP Chief Operations Officer Nagiel Banacia said he hopes that only fully trained persons be tapped to run the command center.

He said security cameras can be placed at the perimeter fence and on the streets of the SRP.

At the SRP area alone, about 25 armed security personnel and three partrol cars patrol the property for 24 hours.

“If this will be implemented, security will be strengthened, it would make our jobs easier, less costly," he said.

Dads to authorize Rama to sign: Filinvest gets deal for project at South Road Properties

By Rene U. Borromeo Updated January 24, 2009 12:00 AM

CEBU - Filinvest Land Inc. has officially been given the nod to go on with a proposal to develop a portion of the South Road Propetries (SRP).

Acting Vice Mayor Hilario Davide III yesterday assured that the Cebu City Council will not delay the approval of a resolution that will authorize the acting mayor to sign the contract for a joint venture with FLI.

The members of the Joint Venture Selection Committee headed by city administrator Francisco “Bimbo” Fernandez met yesterday and awarded to FLI the contract for a P25 billion joint venture project at the SRP.

Before Acting Mayor Michael Rama can sign the deal, he needs the nod of the city council.

Davide said the issue about the joint venture project with FLI will be discussed by the council on Wednesday and there is also a possibility that a special session will be held.

Fernandez also believes that the city council will not delay the granting of authority to Rama to sign the contract, but said “They must do their job without sacrificing the issue of transparency.”

The agreement is that within one month after the actual signing of the contract, FLI will release its initial payment for 10 hectares. The total will be paid within a period of three years.

In its proposal of FLI offers to purchase 10 hectares for P1.5 billion and to develop the other 40 hectares in a joint venture scheme with the city.

Fernandez said this is very timely, because the city needs P338 million next month to pay its loan from Japan.

“Aw hinoon wala man kita karon maproblema sa kwarta kay naa may daghang nakolekta nato nga buhis,” Fernandnez said.

Meanwhile, Fernandez said he is hoping that the Cebu provincial officials will no longer pursue their intention to bid for the same area that the Filinvest Land Inc. wants to develop.

Rama has rejected the appeal of the Cebu provincial government to contest the unsolicited proposal of FLI. .

Fernandez explained that the province is not qualified to challenge the offer of FLI, first because it is not a private entity as provided for under the city ordinance that created the joint venture agreement.

It’s Not Over

“We will move on.”

This was what Capitol consultant Rory John Sepulveda said in a press conference yesterday after he was asked regarding Governor Gwendolyn Garcia’s next move after the Cebu City government awarded the joint venture project to FLI.

“We’re still on top of the situation,” Sepulveda said.

The Capitol was not surprised with the city government’s action and that they knew it beforehand.

He said that despite of not being able to come up with the P125M bond that the city asked from the province for the joint venture, Capitol will still move forward with their plans.

Sepulveda further said that as far as the administrative process is concerned, Capitol fought in a clean and honest way, and they never surrendered.

He added that the lady governor has a game plan and that is to increase economic activity to generate more jobs.

“This is what we are going to do in response to the world economic slowdown,” he said.

Part of the game plan is to continue building roads, bridges, infrastructures and school buildings.

In addition to that, he also said they would continue delivering basic services to Cebuanos, especially to investors and tourists, and putting up economic enterprises.

When asked if they will file an appeal or give up on the SRP joint venture project, Sepulveda said that they will wait for its finalization before commenting on the matter.

He noted that it would take three years before the project would be realized and that if ever Filinvest could not pay the P1.5 billion for the 10-hectare lot in time, they will look at the contract and see if it is all right to try again. –with Johanna Natavio and Darlene Sino Cruz/NLQ (THE FREEMAN)

Filinvest’s P338-M payment set for South Road Properties loan

By Marian Z. Codilla and Cris Evert B. Lato, Reporters

WITH the P338 million it looks forward to receiving from Filinvest Land Inc., the Cebu City government hopes to pay a P350-million loan amortization on Feb. 20 for the South Road Properties (SRP) reclamation site.

Acting Mayor Michael Rama, who is in Manila, is expected to issue the notice of award next week.

The notice of award and a City Council review of the joint venture contract between the city and Filinvest will have to be undertaken before the developer releases the P338 million as initial payment for several hectares of prime lot at the SRP.

City Administrator Francisco Fernandez said Rama will first issue a notice of award to Filinvest which contains the conditions for the joint venture agreement for the P25 billion development project.

Upon receiving the notice, Filinvest has 15 days to complete requirements for the joint venture agreement.

“They have to fulfill the requirements before the signing of the contract such as authorization issued by their board,” Fernandez said.

The city's joint venture ordinance states that failure to comply “with the conditions precedent for the execution of the contract within the prescribed 15 calendar day period will result in the confiscation of the proposal security.”

After the notice of award is issued, the Cebu City Council will deliberate on the contract within seven calendar days.

If there is no legal impediment, the council will authorize the mayor to sign the joint venture contract with Filinvest for development of 50.6 hectares in the SRP.

Tristan Las Marias, Filinvest vice president for the Visayas and Mindanao, said the company renewed its P250 million guarantee for their project proposal security with a bank.

He said they will extend it until the first week of February when the mayor signs the contract.

Still, Fernandez said they are hoping that the contract is signed before the city is scheduled to pay around P350 million for the SRP loan to the Land Bank of the Philippines on Feb. 20.

“This (P338 million income) will be the amount that we will be using (to pay for the SRP loan),” Fernandez said.

Cebu City Councilor Jose Daluz III said the city can expect a bigger budget surplus since the city council already appropriated P489.5 million for SRP loan payments on their budget this year.

The payments are scheduled on Feb. 20 and Aug. 20.

As of now the contract is still secured by the JVSC secretariat and will only be publicly discussed during the council deliberation on either regular or special session.

Las Marias said they are going to start their development immediately after finalizing their master plan and completing all their building requirements.

The P25 billion project will be completed in a span of over 25 years.

Aside from the amount, the city stands to receive P250 million a year for the property’s outright sale plus a 10 percent minimum guarantee share of their gross income.

Filinvest plans to put up an urban commercial district which consists of a hotel, office spaces and condominium towers in the sea front area and medium rise buildings for residential area on the other side, across the sea front area.

Meanwhile the heads of three separate business chambers in Cebu hailed the decision of the joint venture selection committee (JVSC) of the Cebu City government to award the development of 50.6 hectares of SRP lots to Filinvest.

Clarito Fruelda, vice president for external affairs of the Cebu Chamber of Commerce and Industry, said this latest development raises bright prospects for Cebu amid the worldwide economic slump.

“We hope that FLI will move faster and start development in the area so it (development) can generate business and employment,” he told in a phone interview yesterday.

Fruelda said the project is a proof of FLI's confidence in Cebu as a viable venue for business development.

Rey Calooy, president of Filipino-Cebuano Business Club, said the rise of new infrastructure and facilities at the SRP will attract foreign investments.

“It (SRP) should be developed by a private developer (like FLI) to ensure efficiency and quality service. It generates jobs, business opportunities, (healthy) competition and national and local taxes,” said Calooy.

For Gordon Alan “Dondi” Joseph, president of the Cebu Business Club, the JVSC's decision signals that the “city's long wait is over.”

“They will be in a better financial position to deliver services to the city residents. It does represent huge potential for the investor and the city,” he said in a text message.

Capitol to ‘move forward’ (South Road Properties)

Saturday, January 24, 2009

CEBU Gov. Gwendolyn Garcia decided to “move forward” and focus on “worthier undertakings” such as further spurring economic activities in the province, her spokesperson said yesterday.

Capitol information and revenue generation consultant Rory Jon Sepulveda said they do not want to be accused of delaying developments at the South Road Properties (SRP), whose loan interest costs Cebu City taxpayers about P1 million every day.

Governor Garcia is scheduled to preside over a two-day seminar with Capitol department heads and consultants starting today in Sogod town, just a day after the Provincial Government ended its tourism caravan “Suroy Suroy Sugbo: Southern Heritage Trail.”

Sepulveda said it’s important that the Provincial Government did not pay the P125-million nonrefundable appeal fee the City Government demanded for the position paper the Capitol filed with the mayor’s office.

Even if the City Government rejected their bid, the Capitol consultant said the Provincial Government believes its officials “did everything insofar as the administrative process is concerned.”

“We fought it out. We fought a clean and an honest battle,” said Sepulveda, saying it would be the City’s call whether to award the contract to the Filinvest.

“If they will award it (contract), I will not be surprised. We knew they would award it,” he said. (GMD)

Cebu City to earn P350M in February and P250M a year for 6 years from South Road Properties joint venture

Linette C. Ramos
Sun.Star Staff Reporter

FOUR years after it started paying for its loans, Cebu City Hall will start earning from the South Road Properties (SRP) next month, if the City Council authorizes Acting Mayor Michael Rama to sign the P25-billion joint venture contract with Filinvest Land Inc. (FLI).

Within 30 days from the signing of the contract, FLI is required to pay the City Government P350 million as down payment for the joint venture to develop a 50.6-hectare portion of the SRP.

It will also pay P250 million a year for six years as payment for the 10.6-hectare waterfront Pond F lot worth P1.5 billion, an outright sale that was integrated into the joint venture activity.

Under the City’s Joint Venture Ordinance, the proponent will have to pay a down payment 30 days after the signing of the contract, but FLI vice president for Visayas and Mindanao Tristan las Marias said they could pay the amount earlier.

Until it pays the P338 million, the City will hold on to FLI’s irrevocable bank guarantee of P250 million, which the City can seize if the firm backs out of the project.

At noon yesterday, the City’s Joint Venture Selection Committee (JVSC) convened and awarded the joint venture contract to FLI, which coincided with the City’s celebration of the Sto. Niño feast at the SRP.

The JVSC prepared to submit the notice of award and a copy of the contract to the mayor for his confirmation.

From the mayor, the contract will be transmitted to the City Council for the body to authorize the mayor to sign the contract and enter into a joint venture agreement with FLI.

Authority

City Administrator Francisco Fernandez, the JVSC chairman, said the contract does not have to be approved by the council, and will only have to pass a resolution authorizing the mayor to sign the document.

“The JVSC has already awarded it so we will now submit it to the mayor for him to sign the notice of award and to ask the council for authority to sign the contract. So, human na ang role sa JVSC in the process,” he told reporters yesterday.

After deliberating on the FLI proposal, the JVSC, whose members might be replaced, is set to tackle proposals for water supply at the 302-hectare reclaimed facility.

The JVSC also came up with a timetable on when the contract signing will be. But officials said the date will be up to the council, which might want to review the contract further before authorizing the mayor to sign.

Fernandez said the contract may be signed in the first week of February since Acting Vice Mayor Hilario Davide III said the council may tackle the matter during their session this Wednesday.

On Feb. 20, the City will be paying Land Bank P350 million for its SRP loan payment, that is why it will be advantageous to the City if it gets FLI’s down payment by then, he said.

Review

“But it really depends on the council. We have to consult the councilors and the vice mayor for the timetable. While we want to do it sooner, there also has to be a balance. On one hand, we want to settle this immediately because we are under time pressure to pay. But on the other hand, it has to be balanced in terms of transparency. The contract has to be reviewed not only by the council but also by the public,” Fernandez explained.

In an interview after the awarding, Las Marias said they are preparing for the “real work” for the firm, which will include a review of the initial concept of the project and coming up with a master plan for the entire 50.6-hectare area.

FLI committed to build 875,000 square meters of building space in a hotel, office buildings and high-rise condominium towers at the 10-hectare waterfront area, and medium-rise residential buildings on other areas of the property.

The City stands to have two revenue sources from the project: the payment for the 10-hectare lot that FLI is buying and revenues from the sale of the properties under the joint venture on a 40-hectare area.

Las Marias said the City’s share of their sales is 10 percent, plus an undisclosed minimum guaranteed amount.

‘Will gain’

“On the purchase price, the price of the City is much higher than what COA allowed, so I guess that speaks a lot about the kind of returns it will be getting. On the joint venture project, there’s a minimum guaranteed return and at the end of the day if you compute the total amount the City will receive with the minimum guarantee, it’s
equivalent more or less to the value per square meter, and that’s higher than what was set by COA,” he told reporters.

“In both transactions, I am pretty sure that the City stands to gain more than the current fair market value of the land,” Las Marias continued.

FLI, he said, intends to start construction six months after the City grants them building permits, which they will apply for immediately after the signing of the contract.

Fernandez also welcomed the Province’s statement that it will move on and respect the City’s decision disqualifying Capitol from challenging the FLI offer.

“The Province came out with a statement and they are very statesmanlike. Of course we are very happy with their statement that it is the end,” he added. (LCR)

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