Will SRP project push through?

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Monday, May 5, 2014


IT IS supposed to generate revenue of P32 billion for the city in 25 years but the proposed Japanese retirement facility at the South Road Properties (SRP) doesn’t appear to be in a position to take off soon.

It seems that after months of haggling, the respective positions of the private investors and the Cebu City Government are farther apart than when they started negotiating. The funny part is that everyone wants the project pursued.

The plan, as unveiled during a presentation by I Land Way Philippines and its local partner Beta Aquila Primary Corp., was for the construction of three multiple-use buildings with 855 units that can accommodate 1,125 retirees on a 1.2 hectare lot at the SRP. The construction cost was placed at P1.4 billion.

Under the proposal, the builders were to lease the city-owned lot at $.50 per square meter for a period of 25 years, renewable for another period of 25 years. At the exchange rate of P45 to a dollar, that translates to roughly P22.50 per square meter which was much lower than the valuation set at P100 by the city’s appraisal committee.

As if the cheap rental wasn’t bad enough, it was proposed to be not subject to any escalation, meaning it will remain P22.50 per square meter throughout the 50-year duration of the lease, including the extension, if any.

The city council promptly created an ad hoc committee to study the proposal. It was composed of Councilors Gerry Carillo as chairman and Margot Osmeña, Noel Wenceslao, Hans Abella, Mary Ann de los Santos, Nestor Archival and Sisinio Andales as members.

After the bipartisan committee convened, it recommended that the rental be set at P100 per square meter, subject to an escalation of 3 percent every five years. The period was the same – 25 years plus an option to renew for the same number of years – but the lease was subject to automatic review by the city every five years and to the condition that it shall last only for as long as the joint venture between I Land and Primary Properties existed.

The counter-proposal from the investors provided little improvement from its previous offer. Pointing out that the Special Economic Zones in Cebu charged not more than P28 per square monthly rental, they suggested that they be made to pay only P32, this time subject to a 2 percent escalation every five years commencing on the fifth year.

The catch, however, was that they now wanted a 50-year contract plus an extension of 25 years.

“I shall have been fertilizer by the time the lease ended,” Margot Osmeña exclaimed during an interview yesterday. “I shall have long turned to dust by then,” said another ad hoc committee, member Mary Ann delos Santos.

They fully support the idea of establishing the retirement facility, both lady councilors declared, but they wanted to make sure that the interests of the city are protected. Seventy-five years is a long time (the Public Land Act provides that public lands can be leased for a maximum period of 25 years with an option to renew for the same number of years), Margot and Mary Ann averred.

I Land and its local partner are still committed to build the facility, they told the ad hoc committee, but they want the city to decide soon in order to enable them to meet their targets. They also hinted at relocating elsewhere if they couldn’t get the city to agree to their terms. We’re getting attractive offers from other local government units but we’re giving Cebu City first crack, they said.

I do not know how the council will respond to the veiled threat. An executive session is scheduled on Thursday, May 8. By then we should already have an idea whether the project will push through or whether it will become the baby that everyone said it wanted delivered but couldn’t agree how.

(frank.otherside@yahoo.com)

Published in the Sun.Star Cebu newspaper on May 06, 2014.

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