Cebu City Council rejects Kawit deal

By: Morexette Marie B. Erram May 11,2018 - 11:35 PM

THERE may be no casino and resort to rise in the eight-hectare Kawit property in the South Road Properties (SRP).

This developed after the Cebu City Council junked the resolution that would have authorized Cebu City Mayor Tomas Osmeña to sign a joint venture agreement (JVA) with the Gokongwei-led group to build an integrated entertainment and business hub on what used to be Kawit Island that now formed part of the land mass of the reclaimed SRP.

The council, in a special session yesterday, voted 9-8 to reject the proposed P18-billion project backed by Osmeña.

Councilor Eugenio Gabuya Jr., who authored the resolution, and the seven other members of the Bando Osmeña-Pundok Kauswagan (BO-PK) were tied with the eight Barug Team Rama councilors, but Vice Mayor Edgar Labella, the council’s presiding officer and also with Barug Team Rama, broke the tie in favor of rejecting the project backed by the mayor.

Osmeña, in a press conference yesterday, said he had expected the opposition-dominated city council to block the project but was still disappointed that it happened.

“I told you, it’s going to happen. But it’s very simple politics to them. Because if they’re going to approve it, election time in May, there’s going to be lots of construction there. Everyone in Cebu will be excited but they’re going to lose the elections,” said Osmeña.

Gabuya told reporters he was not going to give up and planned to reintroduce the proposal.

Councilor Margarita “Margot” Osmeña, the mayor’s wife and a member of the council’s ad hoc committee that was tasked on scrutinizing the deal, also hinted she was not about to give up on the project.

“But we’ll just see. We’ll just take one step at a time,” said Margot.


Labella maintained he found the JVA to be disadvantageous to the city government.

Labella’s decision to vote against the P18-billion deal stemmed from the objections raised by some opposition councilors during yesterday’s special session.

Councilor Joel Garganera questioned the sharing scheme between Universal Hotels and Resorts Inc. (UHRI), the development arm of the Gokongwei-led JG Summit Holdings Inc., and the city government, with the latter getting 10 percent of the rental revenues.

“To me, it’s unacceptable. It should be proportionate to the asset or site that the city gave. It was P1 billion per hectare. It’s safe to say that our share should be P10 billion. Why the city only gets 10 percent while they (UHRI) gets 90?” said Garganera.

Instead, he suggested for the city government to allow the proponent to lease the property at a fixed price.

“Nine years to collect 10 percent only is a great loss to the city,” added Garganera.

Twin blows

Last November, UHRI submitted its proposal to develop the Kawit property into an integrated resort, with a hotel, a casino, an amphitheater, to name some.

They initially planned to lease the property for 50 years, at a price of P18 billion.

But before the city government can push through with the deal, the council formed an ad hoc committee last March to scrutinize the proposal.

Aside from Margot, the committee was composed of Councilors Sisinio Andales, Raymond Alvin Garcia, Jose Daluz III, as members, and Renato Osmeña Jr. as the chairperson.

Last April 24, the ad hoc committee submitted a 14-page committee report containing suggestions and recommendations to revise the JVA. These included specifying the obligation of UHRI and the city government to conduct a mutual negotiation, instead of an automatic renewal, once the lease expires.

Osmeña submitted the revised contract, in compliance to the conditions laid out by the ad hoc committee, a day before the council gathered for its regular session last May 8. But the council instead voted to put off making the decision until yesterday’s special session.

Osmeña’s agenda

Following the council’s decision to junk the P18-billion JVA for the Kawit property, Osmeña said it only made him more determined to enable the BO-PK to secure a majority in the council.

“It was supposed to infuse P18-billion into Cebu’s economy and bring 5,000 new jobs to the Cebuanos. This project was supposed to be the flagship of Cebu. This is why we need barangay candidates who will elect an ABC (Association of Barangay Councils) president and SK (Sangguniang Kabataan) president who will allow Cebu City to progress. The two votes they will bring to the city council will make or break what happens in Cebu’s future,” said Osmeña.

The mayor also challenged the opposition to find another business group that is willing to invest in the Kawit property.
“(Team Rama’s) reasons range from ’there are better deals to be made’ to ’John Gokongwei is not qualified.’ Where are their better deals? What investor do they have who is willing to offer more to Cebu? So where is Team Rama’s better offer? Or is Team Babag’s offering nothing? OK as long as they can stop the rest of us from doing anything as well?” Osmeña added.

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TAGS: Cebu City Council, Kawit deal, REJECTS

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