LIKE Capitol officials, former senator John Henry “Sonny” Osmeña believes the Cebu City Government’s joint venture deal with Filinvest Land Inc. (FLI) is grossly disadvantageous to the city.

Sonny, who plans to run for city mayor in May, also criticized the absence of a detailed development plan for the South Road Properties (SRP) and the lack of a proper bidding, which he said are deficiencies that kept the City from selling the lots at a higher price.

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He said the Cebu City-FLI transaction is simply a real estate sale masquerading as a joint venture to obviate the requirement of a public bidding, which was previously pointed out by the Garcias.

Unlike the Garcias, however, the former senator said he will not file a case against the City over SRP transactions.

Sonny said he was satisfied with the transparency and openness in the one-hour briefing given by City Administrator Francisco Fernandez, SRP Management Office (SRP-MO) head Nagiel Bañacia and Assistant City Treasurer Emma Villarete at the SRP-MO yesterday morning.

‘No planning’

“But I did not agree or approve of the transactions that were entered into. To begin with, there was no planning undertaken... If they had conducted the proper planning, they would have been able to sell smaller lot sizes and obtain higher prices than what they got,” he said.

The city officials said, however, that consultants from the Asian Development Bank are currently completing the study on the different utilities and infrastructure needed at the SRP, which would be the basis of a development plan.

In a press conference after the briefing, Sonny also said he doubts whether the City’s earnings from the SRP lot sale and lease would be enough to cover its debts.

“The selling price is not enough to cover the cost of the project, like the payments made to Land Bank and JBIC. The discussions totally ignored the fact that the project cost the City P3.3 billion to date. It was not taken up until I raised it,” he said.

The SRP has so far earned only P363 million from the lease of Bigfoot Properties and the first payment of FLI for the 10.6 hectares it bought.

The City still has an unpaid balance of 9.59-billion yen (about P5 billion using the current exchange rate of P.5221 for every yen) for the main loan package with the Japan Bank for International Cooperation (JBIC), and a balance of P515.7 million for the second and third loans.

Re-negotiate

If elected city mayor, Sonny said he would hire professional urban planners to study the SRP and come up with a development plan and implement a land use plan and proper zoning of the lots, to be imposed on all developments within the SRP.

And because there was no proper planning for the SRP, the 290-hectare facility has no hospital, school, bus stations, water and power supply before the lots were sold.

Sonny said he will also re-negotiate the sale contract with FLI and other buyers to increase the City’s proceeds and make it more advantageous to the City.

“But I have to be mayor first, that’s why I should be mayor because I know what I am talking about. If I’m not elected mayor, there’s nothing I can do about it, then just let Mike Rama do it,” he told reporters after his briefing yesterday.

Since the City sold the lots in bulk, 50.6 hectares to FLI and another 30 hectares to be sold to SM Prime Holdings, the City did not get the prices it should have gotten, said Sonny.

Too low

He also said that the five-percent interest rate for the unpaid balance of FLI is too low, citing the prevailing interest rates of banks of 12 to 18 percent per year.

FLI bought the 10.6-hectare Pond F at P15,000 per square meter, payable in six years.

“The Filinvest transaction is a pure and simple real estate sale masqueraded as a joint venture. It’s not a joint venture, it’s a sale on installment basis with the balance charged with a five-percent interest, which is very low... There was no public bidding. If they held a public bidding on smaller lots, there would be more participants, we would have gotten a higher price for it,” Sonny said.

When sought for comment on his cousin’s statements, Tomas said he is willing to be investigated if there is anything irregular in the SRP deals.

Fernandez also said that they expect the lot prices to shoot up once FLI and SM start their development projects.

He said that even if 50.6 hectares are now with FLI and even if SM pushes through with the purchase of 30 hectares, there will still be 150 hectares left, which the City could sell for a higher price.

“Sonny, of course, is entitled to his own opinion. So I will answer his points in a detailed presentation. I’m really glad that he has scrutinized the SRP because the people should not take it for granted. It is too big a transaction that the people should challenge the mayor and ask if I let them down.

It would be my honor to submit myself to examination,” Mayor Osmeña said.

Sonny received yesterday a copy of the Cebu City-FLI joint venture contract, the Commission on Audit’s appraisal report on SRP lots and documents on the financial status and loan obligations to Land Bank of the Philippines and the JBIC.

He said he will review the documents further and raise more concerns if he finds anything questionable. (LCR)