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)