Cebu City soon to get P348-M for South Road Properties land

Cebu City will soon receive P348 million from the Filinvest Land Inc. as down payment for the outright purchase of a 10.6-hectare lot at the South Road Properties (SRP).

The City Council yesterday authorized the mayor to sign the contract after the Cebu City committee on laws determined that the Joint Venture (JV) contract between the Cebu City government and the Filinvest was legal.

But acting Cebu City Mayor Michael Rama said that he would have to study the contract first before signing.

Cebu City Administrator Francisco Fernandez, who is also the chairman of the Joint Venture Selection Committee (JVSC), said the Council only authorized the mayor to sign the contract and does not mandate Rama to sign it.



But he said he hoped that Rama would agree with the provisions in the contract.

Rama assured his review would not take long as he would be the last person to stop the project.

Tristan Las Marias, Filinvest vice president for the Visayas and Mindanao, asked the city to transfer the title of the two hectares of the 10.6-hectare property covered in the outright purchase to Filinvest once they hand over the down payment.

Upon the signing of the contract, FLI will pay the city P348 million as down payment for the 10.6 hectares which is an “integrated and indivisible” part of the JV contract.

Fernandez said the city will release the titles after receiving payment of Filinvest.

The real estate developer will directly give their installment to the Land Bank of the Philippines being the escrow agent. The LBP will release the titles to the company.

Aside from the outright purchase of the 10.6 hectares, FLI will also develop a 40- hectare property under a profit sharing agreement.

Las Marias said they wanted to lump the two components to make sure that they can give the city P1.5 billion in three years time because it is one of the conditions of the project.

Filinvest will compensate the 10.6-hectare property of the city by annual installment of about P250 million plus 10 percent of the revenues of the developed areas, according to Joel Mari Yu, Cebu Investment Promotions Center managing director and the negotiator of the development.

But Tinago barangay councilor and opposition leader Joel Garganera questioned the realization of this assurance.

“It is not clear if the city can get P1.5 billion in three years because how can there be a gross sale. Can they construct a building within three years,” Garganera asked in Cebuano.

Fernandez, however, said that the first deal for the SRP is the most integral part of the development of the entire SRP.

“The first deal is very important. It does not matter how much money we are going to make,” he said.

“Despite the international crisis, we are very happy that Filinvest is pursuing this. This is not just legally acceptable, it is also economically wise for the city of Cebu,” Fernandez said.

The first development will spur more developments in the 302-hectare reclamation property.

Read more...

Special council session set for South Road Properties dev’t pact

By Jully Venus Cuizon, Correspondent


A special session will be held tomorrow by the Cebu City Council to deliberate on the fine print in the joint venture agreement between the city and Filinvest Land Inc. for development of the 50.6 hectares of the South Road Properties (SRP).

This was decided after yesterday’s teleconference between Cebu City Mayor Tomas Osmeña, who is in Houston, Texas for medical treatment, and some councilors concerning the details of the P25 billion joint venture contract with Filinvest.



It was an “informal conversation” with Osmeña who wanted to be updated on the negotiations with Filinvest said acting Mayor Michael Rama.

It was a back-and-forth exchange of “question and answer” as Osmeña sought clarifications on the contract said Councilor Gerardo Carilo.

The Joint Venture Selection Committee (JVSC) is seeking the council's approval to authorize Rama to sign the contract between Filinvest and the city government.

Acting Vice Mayor Hilario Davide said the committee on laws will submit its report and recommendations on the contract to the council.

After Rama signs the contract, the city will receive P338 million from Filinvest as initial payment for the outright purchase of 10.6 hectares of prime reclaimed property in SRP.

Filinvest was virtually guaranteed the contract after Rama denied with finality the motion of appeal filed by the Cebu provincial government challenging the developer's proposal to the city.

Read more...

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)

Read more...