Council junks P18 billion SRP project

CEBU, Philippines — After over two months of discussions, the Cebu City Council rejected the proposed P18 billion development on the Kawit Island at the South Road Properties.

It was Vice Mayor Edgardo Labella, the council’s presiding officer, who broke the 8-8 tie, which tipped the balance to the opposition’s move to junk a resolution, which would have authorized Mayor Tomas Osmeña to sign a Joint Venture Agreement with Universal Hotels and Resorts Inc.

“After hearing the pros and cons, the intention is good but considering that it’s a contract wherein it will be subjected to market forces as what is happening now in the JV agreement with Filinvest, there could be a possibility that this contract is disadvantageous to the city and giving unwarranted benefits to a particular party, the chair is constrained to vote in the negative,” Labella told members of the council.

The decision was carried out during a special session the council held yesterday purposely to discuss the proposed project.

It was Councilor Eugenio Gabuya, Jr. who moved to authorize the mayor to ink the contract after the executive department agreed to delete certain items in the contract as suggested by opposition Councilors.

Councilor Joel Garganera, for one, proposed to have a straight lease instead of a 90-10 sharing in the contract.

In its proposal, UHRI would lease the city’s nine-hectare property by paying 10 percent of the gross real estate rental revenues from commercial/shopping center and the parking lots; 10 percent of gross real estate rental revenues from the integrated resort; 15 percent of gross real estate rental revenues from the casino facility; and 10 percent of the gross real estate rental revenues from hotel rooms.

Garganera said the 10 percent share of the government will only commence on the ninth year after the contract is signed.

“Although UHRI is responsible for the development of the property, we cannot discount the fact that the city is contributing a prime lot in SRP, the value of which will surely skyrocket over the years,” Garganera said.

He also said that the profit sharing will depend on the project’s market performance.

“We must aim for a stable and permanent income, such as straight lease,” he added.

Garganera cited the existing JVA between the city government and Filinvest Land Inc. wherein the city only receives the minimum guaranteed amount of P8,000 per square meter, which is reportedly like selling them a property from SRP in the same amount for the next 10 years despite the increasing value of the properties there.

The straight lease, he said, will compel UHRI to develop quickly because they will be paying fixed and higher amounts every year regardless of the market performance in SRP.

He said the city should not enter into any JVA with investors because the city will be “at the losing end.”

Politics

Osmeña believes opposition councilors are playing politics in deciding the fate of the project. He expected that they would disapprove the project.

“It’s very simple politics for them,” he said.

He said the disapproval of the project also means that 5,000 jobs went down the drain.

“This is really a bad mark for Cebu. This is the way they treat the investor who comes from Cebu. This is a betrayal to the Cebuanos,” he said.

He said he is “hurt” because he has put much effort in getting the project.

He said he will decide on resubmitting the project to the Council after the May 14 barangay and Sangguniang Kabataan elections.

He has since called on the public to support candidates who support his administration. He is eyeing at getting two slots in the Council occupied by ex-officio members – the presidents of the Association of Barangay Councils and the Sangguniang Kabataan Federation.

It was in the first week of March when Osmeña endorsed the proposal to the council. The council then formed a five-man ad hoc committee that studied the proposal and conducted a series of hearings to listen to experts.

 On April 24, the committee came up with a report with recommendations and suggestions to amend some provisions of the contract.  In its regular session on May 8, the council referred the proposed revised contract to the ad hoc committee for further review.

Last Thursday, the committee and representatives of the executive department met and agreed to delete provisions in the contract objected to by opposition councilors.

The mayor’s wife, Councilor Margot Osmeña, said, “In the ad hoc hearings, we didn’t have a problem. I believe it’s a party decision on their part that they don’t want to appear that some wanted.”

She said no other investor challenged the proposal of UHRI. — /JMO (FREEMAN)