Cebu provincial government considering to challenge Filinvest Land’s proposal

Business Mirror, 25 November 2008


A SPECIAL committee created by the Cebu provincial government is set to come up with its own appraisal of a 10-hectare property in the city-owned reclaimed South Road Properties (SRP) the Capitol would like to bid out of the hands of Filinvest Land Inc (FLI).

Gov. Gwendolyn Garcia’s spokesman, Rory John Sepulveda, told the BusinessMirror that an appraisal committee is set to submit its recommendations any time soon on whether the property is a viable investment for the province.

“The governor herself saw the potential of the area, and the provincial government would like to invest and would like to earn revenues from its investment,” Sepulveda said.

The province said it is interested in challenging FLI over its P80-billion unsolicited proposal for 60 hectares of the SRP, which includes a 10-hectare direct land purchase and 50 hectares of joint development with the city. The deal is subject to a public challenge.

Sepulveda, however, said pending the publication of the details of the proposed joint-venture agreement between the city and FLI, the province can only so far commit to challenge FLI over the 10 hectares.

“We believe there are two separate transactions in the proposal—the direct purchase of land and the joint venture—and the province is very interested in the land purchase as of now,” Sepulveda said.

The spokesman denied the interest to challenge FLI is a strategy by the province to shake the negotiations between the city and the developer, especially with the bitter relationship between the governor and Cebu mayor on-leave Tomas Osmeña.

Sepulveda said the province is only looking for economic opportunities, especially since the city imposed a moratorium on all development in its northern areas, where the Capitol has pending development over 100 hectares of separate properties.

“If this challenge will ultimately bring more scrutiny and more discussion over the Filinvest deal, then this will surely get the city the best deal for the SRP,” Sepulveda said. “The province is looking for projects because we don’t have anything else to do.”

Sepulveda said should the city decide to lift the moratorium, he would personally recommend that the province back out of the FLI challenge so it could concentrate on its own lands, including the suspended P1.2-billion joint-venture development in Banilad, Cebu City. He said the actual bid, however, is subject to the findings of the appraisal committee to determine the cost of the land, how much the province is willing to bid and the development cost that would entail if the Capitol gets the property.

In its original proposal, FLI plans to buy the 10 hectares for P2 billion, or some P20,000 per square meter.

The remaining 50 hectares will be developed through a joint venture with the city, with City Hall getting revenue shares.

City administrator Francisco Fernandez earlier said the two deals are part of one deal, whose terms will be published by December in preparation for the Swiss Challenge.

Sepulveda said the Capitol is looking at partnering with a private developer to develop the SRP land should it win in the bidding.

The governor and the mayor’s quarrel started in 2005 when the province moved to get back 50 hectares of property in the city now occupied by informal settlers. The mayor vowed to protect the more than 20,000 of his constituents affected by the move.