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.