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CEBU CITY, Philippines - Starting Thursday, the Cebu City government will start welcoming investors who can come up with a better deal than what Filinvest Land Inc. presented for the South Road Properties (SRP).
In a special session on Tuesday, the City Council authorized the city’s Joint Venture Selection Committee (JVSC) to publish invitation to challenge Filinvest’s unsolicited proposal to develop a 50.6-hectare area of the South Road Properties (SRP).
City Administrator Francisco Fernandez, chairman of the JVSC, on Tuesday briefed the councilors on some parameters of Filinvest’s proposal.
He said the proposal was to tie up with the city government for an “unincorporated joint venture” which duration of 20 years for 40.6 hectares of the SRP, along with the outright purchase of 10 hectares of the property.
He said that in an unincorporated joint venture, the city government and Filinvest will agree to develop an area of the SRP together. The details will depend on negotiations. But City Hall will not share in the management of the developed area.
In return, Filinvest will assure the city government of an annual “minimum guaranteed return” of an undisclosed amount or 10 percent of Filinvest’s profits over the area covered by the joint venture agreement, whichever is higher.
“If they (Filinvest) are not able to sell a single unit, they are obliged to give us a minimum guaranteed return. But if they are able to sell and it is higher than the minimum guaranteed return, they will give us 10 percent of the revenue,” Fernandez said.
“This is what we are now offering the public for third party entities to match or to challenge this proposal,” Fernandez added.
The city administrator said Filinvest has asked that the minimum amount not be divulged yet so as not to put the company at a disadvantage. But the figure will be available among the tender documents presented to any qualified challengers.
Fernandez said that the JVSC was not required to divulge any part of its report on Filinvest’s proposal before the publication of the invitation.
Councilor Hilario Davide III said the committee presented its report in the spirit of transparency.
In its proposal, Filinvest assured that it would provide infrastructure facilities, buildings and other amenities required in a “central business development.”
Filinvest’s proposal assures that in the 20 years that the joint venture agreement is in place, the area will still be the property of the Cebu City government. Within those 20 years, Filinvest will not mortgage or sell the property unless the city allows the company to purchase any section of the property in advance.
Interested challengers may obtain forms for the pre-qualification and eligibility requirements starting December 4 from the JVSC secretariat at the Office of the Mayor in City Hall.
The JVSC has set 11 a.m., of December 18 as the deadline for the challengers to submit their eligibility requirements. Challengers deemed qualified will be given the tender documents starting December 22.
Deadline for the submission of proposals is on January 15, 2009, 10 a.m.
Among the eligibility requirements is for the challenger to be able to prove that it can pour in a “substantial capital” of at least P20 billion.
No show
Despite invitations by the City Council, nobody from the Cebu provincial government showed up for yesterday’s special session.
Capitol officials, as well as Representative Pablo John Garcia (Cebu, 3rd district), earlier criticized the city’s treatment of Filinvest’s joint venture agreement as “legally flawed.”
Garcia argued that the city could not consider as a single package the outright sale of 10 hectares of the SRP with a joint venture agreement covering another portion of the property.
But city officials said otherwise.
“The two are integrated and one cannot exist without the other. Filinvest presented it this way: that the two components are lumped together as an unsolicited proposal and we are just acting on their proposal,” Fernandez said.
Rory Jon Sepulveda, Capitol consultant on information, revenue generation and compliance, said Capitol did not need to send representatives to the City Council session because media reports of the session will do.
He said the Capitol sticks to its stand that the purchase of the 10 hectares of SRP land should not be made part of a joint venture agreement.
Sepulveda said that Section 4.1 of the National Economic Development Authority (Neda) guidelines, which the city used as a basis in drafting its joint venture ordinance, specifically prohibits purchases of land to be made part of a joint venture agreement.
“These (JV) guidelines apply to all government-owned or controlled corporations, government corporate entities, government instrumentalities with corporate powers, government financial institutions, state universities and colleges, as defined under Sec. 50 which are expressly authorized by law or their respective charters enter into JV agreements, LGUs are not covered by these guidelines,” Section 4.1 states.
Sepulveda also said that Sections 379 of the Local Government Code requires all real properties to be sold in public auction, while Section 380 requires all real property purchases to be subject to the approval of the Commission on Audit.
The consultant said if the city insists on selling the 10-hectare lot to Filinvest as part of a joint venture agreement, City Hall may face legal consequences.
Fernandez, however, said that the Capitol is entitled to its own opinions.
“Whether it is illegal or not, we will leave it to the Commission on Audit or to the higher courts to decide,” Fernandez said. /With Reporter Doris C. Bongcac
