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Wednesday, February 22, 2006
Tight COA rules restrict SRP deal with firms
If not for the “meticulous and rigid rules” of the Commission on Audit (COA), Cebu City may have already closed separate deals with foreign investors for a lease of about 50 hectares of the South Reclamation Project (SRP).
COA has yet to give the City Government advice on the legal aspects of dealing with offers from companies.
Some want to lease a portion of the SRP, with an option to buy it later.
However, COA will not let the City Hall follow procedures undertaken by Philippine Economic Zone Authority-registered companies, which are owned by private corporations.
Peza companies can peg a fix rate if they want to lease their land to investors, but COA said the City Hall cannot just follow this method because Peza has its own charter and is independent from the government.
City Hall has to deal with the fact that the SRP is the first and only Peza-registered facility that is owned by a local government unit.
Because of this, the City has to follow government procedures.
“This is what the Cebuanos must understand. The public may now wonder why it has taken us so long to close a deal with investors. A lot of investors are disappointed with us because it is taking us slow to come up with the rules,” CIPC director Joel Mari Yu told Sun.Star Cebu yesterday.
CIPC is the marketing arm of the 295-hectare SRP. The City Government is paying more than P6 billion in loans to build the reclamation project.
“Government rules are rigid. They are not flexible. The way it is might scare investors. We asked COA why can’t we be just treated like Peza?” Yu said.
He explained that COA has not categorically given the City Government a hard time, except that it wants the City to undergo the tedious process of bidding out the lots for lease.
And when they consult with COA officials, CIPC is only given “partial answers.”
“Daghang kuskos balungos. I told them it’s impractical because Peza can give a fixed rate. We are now working with COA both in the regional and national level. We have to consult COA Manila because there are matters that the regional office cannot deal with,” Yu said.
“We have done more than just writing them a letter. We showed the commissioners the entire SRP, had lunch with them and explain the project. But until now they still have not given us the expedient way by which we can conclude the deal,” he also said.
The City is supposed to close a deal with an industrial firm that owns six plants at the Mactan Economic Zone.
Yu said the owner instructed CIPC not to divulge the company’s name.
The contract would have been forged for a lease of 10 hectares at 50 US cents per square meter or P26 per square meter monthly.
If the lease contract is finalized, the City will close the deal at P2.6 million monthly (if computed at P26 X 10,000 square meters X 10 hectares).
Bigfoot Entertainment already expressed its interest to lease two hectares for a start, then another five hectares within three years and eventually buy another 10 hectares.
“Since Bigfoot wants to buy the 10 hectares later they are asking if in the meantime the City Government will accept a reservation fee. We are still waiting for COA’s comment on this,” Yu said.
He said a Singaporean company, which manufactures containers, wants to lease 20 hectares near Pond A and put up its facility immediately. The owner even brought a team of engineers to inspect the City.
But they want the City to build a road in the area.
“The mayor is now looking for sources to finance the road and has instructed the city engineers to work this out,” Yu said.
The Japanese group, which is a partner of Philip Yap of the YY and Company, wants to lease four hectares so they could put up a Japanese retirement facility.
The City is set to bid out 30 hectares in the middle of this year. The City Treasurer’s Office is targeting some P735.5 million from the sale of government lots.
Mayor Tomas Omeña had said the City will have to be flexible in dealing with buyers of the SRP lots.
He said that disposing of the 295-hectare SRP is not a real estate business. It has become real estate only from the standpoint that the City has to pay loans.
Athough the City has left it to the CIPC to market the SRP, Osmeña said he will be the one to decide who gets a portion of the SRP.
He specified three basic policies in managing the SRP: not to go bankrupt, provide employment opportunities for Cebu, and profit. (GAC)
For Bisaya stories from Cebu. Click here. (February 22, 2006 issue)
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