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CEBU CITY, Philippines - The deal is finally closed.
Cebu City Acting Mayor Michael Rama on Tuesday signed the P250-billion joint venture contract with Filinvest Land Inc. to develop part of the 300-hectare South Road Properties (SRP).
Andrew Gotianon Jr., Filinvest vice chairman, signed on behalf of the private developer.
Within 30 days, a downpayment of P348 million will be paid by Filinvest for the outright purchase of 10.6 hectares in Pond F.
Tristan Las Marias, Filinvest vice president for the Visayas and Mindanao, assured the Cebu City government that the company would make payment on schedule.
Filinvest is mandated to start the first phase of development of a 40-hectare joint venture property on August 2009, starting with property along the road.
The Cebu City government is committed to make available water and power supply within the six months before the development starts.
Joel Mari Yu, Cebu City Investment Promotions Center managing director, said the city will now prepare the legal requirements for power and water utilities.
?Putting the water systems (and electricity) in place is a condition precedent under the Filinvest deal. Filinvest wants the water and power rights in order before they operate,? Yu said.
The city is negotiating with the Visayas Electric Co. (Veco) for power supply and is entertaining an unsolicited joint venture proposal of Mactan Rock Industries Inc. for water supply.
Both utility firms will have to pay the city a concession fee if negotiations succeed. The concession fee for electricity needs approval of the Energy Regulatory Board (ERC) while the water supply proposal will have to be bidded out.
The Filinvest JV contract signing on Tuesday was attended by city councilors, who authorized the mayor to sign the deal a day earlier.
City Hall department heads and Filinvest Management officials were also present.
?This is the fruit of our very hard work. We faced many hurdles, many problems but on the way we faced many heroic acts of many people. This is just the beginning and there is more that will come,? said Cebu City Administrator Francisco Fernandez, chairman of the Joint Venture Selection Committee.
He said the signing of the SRP joint venture contract signals the beginning of the city's economic recovery.
The city has been paying roughly P1 million a day for its loan from the Japan International Cooperation Agency for the reclamation project.
Because of this, the city had made it a condition for the first developer to be able to earn for the city P1.5 billion within three years.
To reach that amount, Yu said Filinvest agreed to pay the city four times over three years which would amount to P1.54 billion.
The first amount will be Filinvest's downpayment which is P348 million.
The rest of the payment will come from the sale of the property which is about P250 million a year plus the minimum guarantee return of the city, which is the selling price of the property per square meter plus 20 percent interest of the property being developed.
The first portion of the 40-hectare joint venture property that will be developed by Filinvest costs P11,000 per square meter because of its location along the road.
The contract states that the developer must develop the 40-hectare property in four phases. Each phase will cover at least 10 hectares that will be developed within five years.
Las Marias said Filinvest would also develop each 10-hectare lot by phases depending on their master plan.
Filinvest has only six months to secure all permits and clearances from the City Hall.
With the signing of the contract between Rama and Gotianon, the Cebu City councilors said they were optimistic about the future of the city.
?It is clear that after Filinvest starts building at SRP others will follow when they realize the business potentials and advantages the SRP offers,? Cebu City Councilor Sylvan Jakosalem said.
