FORMER Cebu City mayor Tomas Osmeña said the joint venture agreement (JVA) for the development of an integrated resort in the South Road Properties (SRP), where the present Nustar Resort and Casino is located, is beneficial to the city.
Osmeña said this in a press conference on Saturday, Oct. 21, 2023, after the Office of the Ombudsman dropped the administrative and criminal charges filed against him and some former and current Cebu City Government officials, as well as private respondents from the Gokongwei Group.
He recalled that during his time as mayor, the opposition did everything in their power to stop the project, which, for him, was due to “selfish political ills.”
Osmeña said his decision to speak out about the case was not motivated by a desire for vindication, but to prevent the people from being “misled” into thinking that the JVA with the Gokongwei Group was disadvantageous to the City.
He said the JVA was advantageous to the City because Nustar’s owner Universal Hotels and Resorts Inc. (UHRI) (a member of the Gokongwei Group) spent P20 billion on the construction right away.
“Not benefit? And then when you see a structure like that, I’m not talking about theory. I’m talking about (an) actual (building.) You can actually go there and you can see it’s standing. Now, what does that mean? It means that all our properties in the SRP go up in value,” he added.
In November 2017, then mayor Osmeña announced that UHRI had agreed to develop Kawit Point (formerly known as Kawit Island) in SRP into an integrated resort and casino complex.
Charges vs. Osmeña
In a 21-page joint resolution dated Jan. 25, 2023, Graft Investigation and Prosecution Officer II Rhyan Pañales cited a lack of probable cause for the dismissal of the criminal complaint filed by businessman Crisologo Saavedra Jr. against then mayor Osmeña, then Sangguniang Panlungsod (SP) members Margarita Osmeña, Dave Tumulak, Sisinio Andales, Alvin Arcilla and Eugenio Gabuya Jr.; and incumbent SP members Jerry Guardo, Joy Augustus Young, Mary Ann de los Santos and Franklyn Ong; and private individuals from UHRI president Frederick Go and board directors Lance Gokongwei, James Go, Robina Gokongwei-Pe and Patrick Henry Go.
The administrative complaint for conduct prejudicial to the best interest of the service and conduct unbecoming of a public official against the public officials was dismissed due to lack of substantial evidence.
Saavedra filed the complaints on Jan. 9, 2019. The case was docketed on April 29, 2022.
The complaints alleged that the key officials allowed the City Government of Cebu to enter into a joint venture agreement (JVA) with UHRI even though UHRI lacks technical and financial capabilities and experience.
According to the resolution, Saavedra also said the JVA was grossly disadvantageous to the City as it would be “giving away ownership of its land worth P10 billion to UHRI in exchange for a measly 10 percent share in profits.”
Sought for comment, incumbent Cebu City Mayor Michael Rama said he welcomes the development but he still has to look into the joint resolution.
Benefits
Osmeña said the City does not get a 10 percent share of the profits, but it gets 10 percent of the gross revenue in rentals.
“What is the difference? Profit is after expense; that is why you call it ‘ginansya.’ The percentage of gross rentals is like VAT (value added tax); 10 percent of whatever they collect, whether they make a profit or not. That’s the difference,” Osmeña said.
He said the City is entitled to receive 10 percent of Nustar’s gross revenue, which is easier to audit.
He said the arrangement is more for transparency and lesser opportunity for graft and corruption.
“In the minds of the stupid opponent in the City Hall, the City did not benefit; in my mind, the city is not the City Government, but the people themselves,” Osmeña said.
Osmeña said the term of the JVA runs up to 50 years, after which the management of Nustar will be transferred to the City Government.
Osmeña said even from the beginning, Cebu has benefited from the project, starting with the construction stage with the P20 billion budget from the proponent, from which contractors, laborers, and other working groups benefited.
Before, Kawit Island lacked essential infrastructure and was under the Department of Health’s ownership. However, Osmeña said he worked to transfer ownership to the people of Cebu.
Right process
In the same press conference, former majority floor leader and former chairperson of the committee on budget and finance Margot Osmeña, Tomas’ wife, said the project went through the right process and was presented to the City Council.
Margot said they created an ad hoc committee for the project, composed of five councilors, and mostly from the opposition. The committee was chaired by former councilor Junjun Osmeña.
She said the committee was formed to study the unsolicited proposal.
She said whatever amendments or corrections were required were all included in the final proposal and were submitted to the City Council, which gave its approval.