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CEBU CITY, Philippines - The Cebu provincial government is looking at a possible investment in the South Road Properties (SRP) after the Cebu City government stalled its Ciudad project along Governor Cuenco Avenue.
“We will dance where the music is played,” said Rory John Sepulveda, Capitol consultant on information and revenue generation.
He said that since the city government would not allow the province to proceed with Ciudad to avoid traffic congestion in the north district, provincial officials would explore shifting economic endeavors to the south.
“We (provincial officials) have realized that we can't just sit idly by,” he said referring to an indefinite wait for City Hall to issue a locational permit for Ciudad.
“They have repeatedly announced that that no development will be allowed in the north, so we decided, siguro there will be no more hitch if we do our developments in the SRP,” said Sepulveda.
One option is to buy lots in the 300-hectare reclamation area and develop them later.
The other is to enter into a partnership with a private developer and challenge the unsolicited proposal of Filinvest Land Inc. (FLI) to buy and develop land at the SRP.
FLI earlier proposed to build P80 billion worth of infrastructure in the SRP for both international and local markets under a joint venture scheme with the Cebu City government.
Cebu City Mayor Tomas Osmeña on Monday posed no objection when told of the provincial government’s interest.
“No problem if the main developer qualifies,” he said in a text message to Cebu Daily News.
“Neda (National Economic Development Authority) guidelines will be followed for qualified bidders.”
Cebu City Administrator Francisco Fernandez said the province of Cebu has to prove it has the financial means, track record, technical competence and other requirements to quality to join in the Swiss challenge of FLI's proposal.
“As far as I know, this challenge is open to everybody. Now the issue here is whether the province is qualified. Are they competent to do that themselves? Have they done any development project that we can say that they would qualify?” Fernandez said.
The plan to invest in the SRP was reached by Governor Gwendolyn Garcia, her father Representative Pablo Garcia of the second district and brother Representative Pablo John Garcia of the 3rd district during a meeting over the weekend.
Sepulveda said the idea would have to be presented to the Provincial Economic Enterprise Council (ECC) for approval.
Governor Garcia heads the ECC with Vice Governor Greg Sanchez as co-chairperson.
At least four Provincial Board members and Capitol department heads are members.
Sepulveda said he would not preempt City Hall’s response by speculating.
“Let's give them the benefit of the doubt and we (on our part) are acting for the best interest of the province,” he said.
Sepulveda said an SRP investment was something to look into as an economic enterprise.
“Kung dili pa nila ipagamit diri (if they would not allow us pursue the Cuidad development) for whatever reason, then we will find a way (to raise additional revenues),” said Sepulveda.
Mayor Osmeña last year stalled the application for a locational clearance of Fifth Avenue Development Corp. for the Ciudad project, a Spanish-themed, mixed-use commercial and residential complex estimated to cost P1.2 billion.
The project, financed by a consortium of investors with the Dino family in Cebu, broke ground in November 2006 but never started construction.
The Cebu City Council passed a resolution on February 14, 2007, imposing a moratorium on any development projects along the Banilad-Talamban corridor pending the conduct of a traffic impact study on Governor Cuenco Avenue.
On Monday, the Provincial Board approved a resolution in mass motion, asking the Cebu City government to lift its moratorium and allow the Ciudad project to proceed.
“With the completion of the Banilad flyover which has brought a conspicuous easing of the traffic flow in the area, the rationale for the non-issuance of the locational clearance as a pre-requisite for a development clearance and building permit may now be disrobed of support or basis, even if it be conceded that the same previously so existed,” said the resolution sponsored by Provincial Board Member Victor Maambong.
Sepulveda said he would write the city government within the week to ask for SRP guidelines for the Swiss challenge, a procedure where a new player will challenge the unsolicited proposal of the first investor.
“We want to do the Swiss challenge. We want to participate actively in the SRP, but they have to level the playing field. We wanted to be furnished guidelines on the Swiss challenge and a possible joint venture,” he said.
Sepulveda said the Capitol is always looking for opportunities to increase the province’s P16 billion in assets and P1 billion cash in bank.
“We always look at opportunities. The provincial government believes that government must have an out-of-the-box revenue generation activity to generate revenues other than from the traditional way of taxation,” he said.
Local governments usually rely on real estate tax collection and a share in national taxes through the Internal Revenue Allotment (IRA) for their financial needs.
Sepulveda pointed to Dubai, where the government owns and operates almost all of the infrastructure in the emirate. A construction boom in Dubai has attracted worldwide attention with its large scale and innovative real estate projects and sports events.
The Capitol, he said, knows several investors they could invite to be a partner with in their SRP undertaking.
“For all we know, we may be able to participate in a Swiss challenge. We will be very happy if we qualify because the provincial government will surely benefit from all the fruits of our investments,” he said.
Sepulveda said the province could afford to pay P2 billion for 10 hectares of land in the SRP like Filinvest and match the developer’s joint venture proposal.
“Ug makaya, moapil mi so wala nay away ana (If we can afford it then we will also place our bid so that we will no longer have to fight with the city government),” he said.
Sepulveda said the Capitol is not a beginner in joint ventures.
He cited the Cebu Property Ventures and Development Corp., a partnership with Ayala- backed Cebu Holdings Inc. founded in 1990 during the term of governor Emilio “Lito” Osmeña.
The company started with 23 hectares of the old Lahug airport, formerly owned by the province and is now occupied by the Asiatown IT Park in Barangay (village) Apas.
“The government must be innovative enough to source revenues other than the traditional ones,” said Sepulveda, who described CPVDC as the most successful public-private partnership in the country.
City Administrator Fernandez welcomed the plan of the province.
“Malipayon ta ana because before you can participate in the Swiss challenge you have to file a bond or cash bond equivalent to the project cost. If they are serious, they have to pay,” he said.
The bond is equivalent to one percent of the project cost. For example, if the total project cost is P25 billion, the bond would be P250 million.
If the challenger wins, the bond will be considered partial payment. If the challenger loses, the money will be returned.
Fernandez said the province would have to show its financial records and track record.
“Whether they are qualified or not, that is not for me to say. But to determine that, we will look at their financial statement, track record, whether they have done any development themselves,” he said.
The SRP's Joint Venture Selection Committee (JVSC) will publish next week in a national newspaper the full proposal of Filinvest. This will give other potential investors the opportunity to challenge the proposal over a period of one month.
Any counter-proposal will be screened by the committee. /with a report from Reporter Marian Codilla
