The hottest 60 hectares of SRP. Filinvest eyes it, the Capitol wants it.
Business Mirror
Thursday, 08 January 2009
The Cebu provincial government is appealing the decision of the Cebu City Hall to disqualify the former from challenging an P80-billion unsolicited proposal by Filinvest Land Inc. (FLI) to develop 60 hectares of land at the reclaimed South Road Properties (SRP).
In a letter to the city’s Joint Venture Selection Committee (JVSC), provincial administrator Adolfo Quiroga said the province has the legal personality and the financial capacity to challenge FLI and provide a better deal for the city.
“Based on the provisions of the Local Government Code, there is no question that the province of Cebu, as a corporate entity or private corporation, is qualified to challenge FLI’s proposal,” Quiroga said in a later dated January 5.
No other entity, aside from the provincial government, challenged FLI’s plan over its proposal.
The provincial government’s appeal will be taken up in a special meeting by the JVSC today, said committee chairman and city administrator Francisco Fernandez.
“We will consider this letter as an appeal and we will make our decision today and send our recommendations to the chief executive for his approval,” Fernandez told the BusinessMirror.
He pointed out that he doesn’t believe the challenge posed by the provincial government is not a means to muddle into the city government’s affairs, taking into considertation the rough relations between Cebu City mayor on-leave Tomas Osmeña and Cebu Gov. Gwendolyn Garcia.
“We will consider their appeal as a collegial body. We will be nitpicking on the technicalities,” he said.
With no other eligible challenger, FLI will be declared the winner to develop 46 hectares of the SRP, should the city stand by its decision to disqualify the provincial government, Fernandez said.
If the city agrees to allow the Capitol to challenge FLI, then the JVSC will give the provincial government enough time to prepare a counter-proposal. However, being the original proponent, FLI has the option to match whatever proposal the Capitol will come up with to retain the project.
The JVSC earlier disqualified the Cebu provincial government from challenging FLI, citing the city’s own ordinance along with national government rules on joint-venture agreements. The city argued that the two rules indicated that local government units are not allowed to enter into such projects with another local government unit.
The JVSC also said the Capitol failed to show that it has the financial muscle to undertake such a massive project.
According to Fernandez there is a provision in the city’s ordinance, which governs joint-venture projects indicating that challengers, which would like to appeal the decision of the city file a nonrefundable appeal fee of not less than one-half of 1 percent of the total project cost, or, in FLI’s case, P250 million.
“We would still have to discuss if this provisions cover appeals on the eligibility phase or appeals during the actual challenge over the project,” Fernandez said.
Should teh JVSC reject the Capitol again, Fernandez said they will declare FLI as the winning proponent of the project.
“It is common sense that we declare Filinvest as the winner as there are no other qualified challengers,” he said.
In its letter, the provincial government cited Section 15 of the Local Government Code, which stated defines the political and corporate nature of local government units.
Provincial administrator Quiroga also cited Section 18 which gives local government units freedom to generate and apply resources to raise revenues.
He also stipulated a certification by the Commission on Audit supposedly indicating it has fixed assets and cash in bank to undertake the project.
In its original proposal, FLI plans to buy the 10 hectares for P2 billion cash, 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 or guaranteed cash revenues whichever is higher.
The governor and the mayor’s quarrel started in 2005 when the province moved to recover 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. The council then issued a moratorium on development over districts where the provincial lots are located, effectively stopping the Capitol’s projects, mostly made in partnership with private investors.
The governor’s spokesman Rory John Sepulveda earlier said they are challenging FLI, because the province “has nothing else to do” with the moratorium in place.
