Gokongwei-led firm gets SRP project: P18 billion deal signed

CEBU, Philippines — Despite opposition’s threat to pursue legal charges, Cebu City Mayor Tomas Osmeña formally signed yesterday an P18 billion deal with a Manila-based developer that would establish a resort and casino on what used to be the Kawit property at the South Road Properties (SRP).

Osmeña signed on behalf of the city government while Universal Hotels and Resorts Inc., project developer, was represented by its president Frederick Go.

Business magnate John Gokongwei Jr. also graced the signing of the joint venture agreement that took place at around 5:30 p.m. yesterday at the Crowne Plaza Galleria, Ortigas Center in Metro Manila.

The FREEMAN tried to reach Osmeña for his comment now that the hotly-debated deal was finally sealed but he declined to issue any statement.

“The opposition might maneuver it,” he said.

But the mayor admitted that this project is a “fundraising” activity for his group, as it would solicit votes from Cebuanos who can be employed by the development.

Osmeña’s council allies were in perfect attendance during the signing: Eugenio Gabuya, Margarita Osmeña, Sisinio Andales, Mary Ann de los Santos, Alvin Arcilla, Jerry Guardo, Joy Augustus Young, David Tumulak and SK Federation President Jessica Resch. The city’s two congressmen, Raul del Mar and Rodrigo Abellanosa, were also present.

Gabuya, proponent of the resolution that authorized the mayor to sign the contract, said part of the deal requires UHRI to post a performance bond equivalent to 10 percent or P1.8 billion of the P18 billion investment commitment upon execution of the agreement.

“UHRI will comply with all conditions in the contract,” he said.

Agreement

The project will be called Isla de la Victoria in honor of the late Elpidio “Jojo” de la Victoria, who was killed in 2006 because of his crusade against illegal fishing.

Under the JVA, the Cebu City government is entitled to receive its share in the project revenues, such as 10 percent of the gross real estate rental revenues to be generated from the retail lease of spaces in the commercial/shopping center and the parking lots; 10 percent of gross real estate rental revenues from the wholesale lease of the gross bare-shell spaces in the integrated resort; 15 percent of gross real estate rental revenues from the wholesale lease in the casino facility; and 10 percent of the gross real estate rental revenues from the wholesale lease of spaces in hotels if the hotels are leased to a hotel operator but if the giant firm will operate it, the city will get two percent from its gross rental in the hotel’s gross room and food and beverage revenues.

The remittance of the city’s share will start on the ninth year or after the eight-year grace period.

During the eight-year grace period, UHRI will pay P1 million per month or P12 million per year starting on the first year of construction period or two to four years prior to operations in lieu of its revenue share.

UHRI’s P12 million annual payment will be used for SRP administration, such as assistance for peace and order, garbage collection, among others.

The P18 billion integrated resort and casino project on the nine-hectare Kawit Island of SRP will be implemented in two phases.

The first phase includes construction of commercial or shopping center, integrated resort facility, convention center, performing arts theater, theme park and iconic public art, a hotel, parking lot, and a casino.

For the second phase, UHRI will construct two more hotels, which is expected to start on the third and fourth year after the JVA was signed.

Under the contract, UHRI will lease the area for 50 years, but that can be extended by 25 years upon mutual agreement of both parties.

“The city’s participation in this joint venture agreement shall not be construed as a waiver of its performance of essential governmental functions such as but not limited to collection of taxes (business and real property taxes), regulation of business activities, and promotion of general welfare of the people,” reads a portion of the JVA.

Also, both parties will form a five-member project committee to oversee the project. UHRI will appoint three names while the city will appoint two. The appointments will be made annually.

Barug’s Response: Charges

Back in Cebu City, Councilor Raymond Alvin Garcia expressed his intention to file charges on the signing of JVA as he believes that the council has not authorized the mayor to enter into the contract.

He said the council session last week in which BOPK allies voted to give authority to the mayor was “illegal.”

Busay Barangay councilman Amilo Lopez tried but failed to secure a temporary restraining order from court that would have prevented the signing.

Lopez alleged that UHRI does not have technical and financial capacity to undertake the project and questioned Osmeña’s lack of authority from the council.

The two-day session last week became eventful when Gabuya reintroduced the measure.  For the opposition bloc, Vice Mayor Edgardo Labella had adjourned the session, which was confirmed by the council secretariat.

However, BOPK’s nine members in the City Council proceeded with the voting in a proceeding led by Tumulak. They voted 8-0 to grant the mayor authority.

BOPK lawyer Amando Virgil Ligutan maintained that the resolution passed by the BOPK allies was valid.

“The signing of the JVA is momentous – this is for everyone – and auspicious for the next generations of Cebuanos,” he said. — /JMD (FREEMAN)