THE Cebu City Council has authorized Mayor Tomas Osmeña to negotiate a P3-billion loan with the Land Bank of the Philippines (LBP) to fund infrastructure projects.
During the council’s regular session last week, Councilors Joel Garganera, Jocelyn Pesquera and Eduardo Rama objected when Councilor Margarita Osmeña moved to approve her resolution.
Garganera and Rama did not elaborate why they oppose the move but during an earlier interview, the two opposition councilors said that the City has funds to implement the projects.
Pesquera, for her part, agreed with Councilor Raymond Garcia, who said that the City should first use available resources before taking out a loan.
“I don’t subscribe to paying millions of interest when we (City) can pay,” she said.
The City and the LBP have yet to discuss the loan terms, including the interest rate.
The available resources the opposition councilors were referring to were the proceeds of the sale of lots at the South Road Properties (SRP) in 2015.
“Before we look for a loan, incurring an additional interest (burden) on the part of the City, it is best that we use whatever resources we have. We have billions from the sale of SRP lots, cash in banks, which we can readily use as available funds to fund all of these projects that the mayor intends to pursue. We do have money,” Garcia said.
In a text message, Mayor Osmeña said the sale of the SRP lots was illegal, adding that former mayor Michael Rama had no authority to sell these.
“The council revoked the authority to sell, still Rama sold it. By using the money, they want me to be part of the anomaly? It’s a cheap trap,” he told SunStar Cebu.
During the session, Councilor Osmeña, explained that the City Accountant Office issued an opinion that proceeds from the sale of SRP lots can’t be used as source of funds as Section 3.4 of the Deed of Installment of the sale provides that only by the full payment of the buyers shall the deed of absolute sale be executed for the purposes of executing the title.
She also clarified that it was the LBP that offered the loan to the City.
In his letter to the mayor, LBP assistant vice president and head of the Cebu Lending Center Allan Bisnar offered the credit facility amounting to P3 billion to finance various projects listed in the City’s medium-term development plan and annual investment plan.
Councilor Osmeña clarified that the resolution only allows the mayor to negotiate with the bank. If the City decides to push through with the loan, she said that the matter will go back to the council.
The City will use the loan to finance drainage, road concreting and other infrastructure projects.
Earlier, the mayor said he would implement several road-asphalting and -concreting projects before the year ends by taking out a bank loan, but he did not specify the areas.