Mandaue City plans to borrow P3 billion to fund new government center, other ‘income-generating’ infrastructure projects

File photo
File photo

A PROPOSED ordinance authorizing the Mandaue City Government’s plan to borrow P3 billion to fund its infrastructure projects has been approved on its first reading during the City Council’s regular session on Tuesday, July 11, 2023.

Among the projects in the pipeline are the conversion of the abandoned Cebu International Convention Center (CICC) into a one-stop-shop Mandaue City Government Center in Barangay Guizo, and the construction of a parking building, playing area, and convention center.

The City Government anticipates that these developments will generate revenue, according to City Councilor Immaline Cortes-Zafra, chairperson of the budget committee.

The draft Ordinance 228-2023 aims to allow the City to secure a loan from lending facilities, Zafra said.

Zafra said an ordinance is required as it will serve as an initial step to initiate the City’s loan acquisition process. After the ordinance is passed on third reading and signed by Mayor Jonas Cortes, the Bureau of Local Government Finance will evaluate the local government unit’s borrowing capacity, which means the maximum amount the City can borrow without jeopardizing its financial solvency.

Cortes-Zafra said that as of now, the city is debt-free.

CICC purchase

The Mandaue City Government purchased the CICC from the Provincial Government for P300 million in 2018 during the time of then-mayor Luigi Quisumbing and then-governor Hilario Davide III.

In 2020, the Capitol under Gov. Gwendolyn Garcia wanted to renegotiate the deal after the Commission on Audit (COA) had called the Province’s attention to the 2018 sale because it was conducted without a bidding or getting approval from state auditors.

Agreement

However, in March 2023, Garcia and Cortes and other city officials agreed for Mandaue City to push through with its plan for a new government center while waiting for COA’s reappraisal of the CICC.

CICC was built for the 12th Association of Southeast Asian Nations Summit in 2007. The three-story structure cost around P840 million to build.

The facility has been unused since it sustained damage during the magnitude 7.2 earthquake on Oct. 15, 2013, and Super Typhoon Yolanda (Haiyan) on Nov. 8 of the same year.

Section 296 of the Local Government Code (LGC) states that LGUs “may create indebtedness, and avail of credit facilities to finance local infrastructure and other socio-economic development projects in accordance with the approved local development plan and public investment program.”

LGUs may obtain credit lines from government and private banks and lending institutions to stabilize local finances, according to the LGC.

They are allowed to engage in deferred payments, contract loans, credits and other forms of indebtedness to finance the construction, installation, improvement, expansion, operation or maintenance of public facilities, infrastructure, housing projects, the acquisition of real property, and the implementation of other capital investment projects, subject to the terms and conditions agreed upon by the LGU and the lender.

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