Big developers silent on when they will pay P6.7 billion
Margot Osmena says there should be transparency in the SRP lot transaction and that investors should be treated with respect. (CDN FILE PHOTO)
Councilors allied with the Bando Osmeña–Pundok Kauswagan (BO-PK) yesterday asked the question foremost in everyone’s mind: Where’s the down payment for the SRP lots?
“Why do you give a notice of award if you don’t get the money? And if we got the money, where’s the money? Is it proper that you give a notice of award without being paid?”
Councilor Margarita “Margot” Osmeña fired off these questions in reaction to Mayor Michael Rama’s announcement that notices of award were already issued to the winning bidders in the auction of two South Road Properties (SRP) lots.
Bidders SM-Ayala consortium, which also includes Ayala Land affiliate Cebu Holdings, and Filinvest Land have maintained their silence over the issue.
None of the four developers, which are all publicly listed and required to disclose any acquisition, have informed the stock exchange about the notice of award yet.
READ: Mayor Rama pulls surprise; serves SRP lot awards in Manila
Mayor Rama said he served the notices in Manila on Aug. 5, a few hours before the city council passed a resolution deferring the sale of the lots. He would not give any other information except that the notices have been “served, received and accepted.”
The 50 percent downpayment for the two lots amounts to P6.75 billion and is supposed to be given upon issuance of the notice of award.
FARCE
Concerned citizens in the Movement for Livable Cebu criticized what it called a “pingpong farce” over the SRP lot sale.
“We cannot understand how a city council can at first limit the power of the mayor to sell through an ordinance in 2012, and then turn around in a supportive resolution to sell the SRP lots, and then backtrack again to obstructing the completion of the sale, without giving the citizens any clear assuring explanation why such is for the good of the Cebu City residents,” the group said in a post on its Facebook page yesterday.
“This ‘pingpong farce’ between the mayor and the city council insults our intelligence and sensibilities,” the group added.
The delay in the SRP lot sale means the city government could not yet retire its SRP debt and will have to continue paying over P500 million a year in loan interest.
Because of the heavy debt payments, city residents have been deprived of basic services, the group said.
“How much longer must we citizens be forced to bear this burden? Until when must we suffer the reduction in basic services?” the group asked, referring to inadequate health care.
In the same post, the group said city officials should consider the welfare of the citizens over and above any loyalties.
They demanded that city officials answer the question: Whom are you serving?
DOWN PAYMENT
The city government was supposed to receive last Friday P6.75 billion to cover the balance of the 50-percent down payment for the two lots.
City Hall received during the June 30 bidding checks totaling P1.67 billion, its biggest revenue take in a single day, as 10-percent bid security bond. The amount formed part of the down payment.
The SM-Ayala consortium offered the lone bid of P10 billion for the 26-hectare Calungsod templete lot and gave a check for P1 billion as bid security bond last June 30. It was supposed to pay around P4 billion on Friday.
Filinvest, which gave the higher bid of P6.7 billion for a 19.2-hectare lot adjacent to its development, gave a check worth over P600 million last June 30. It was supposed to give around P2.7 billion as additional down payment.
Section 15 of the bidding guidelines states that “the winning bidder shall be required, among others, to tender full payment of the amount equivalent to 50 percent down payment of the offered price immediately upon the receipt of the Notice of Award which will be issued not earlier than 30 days from the opening of bids.”
The remaining balance shall be paid in equal annual installments for three years at six percent interest per annum based on diminishing balance.
It further states that the bid bond would be forfeited if the bidders refuse to accept the award or execute the Deed of Sale on installment.
WHY THE RUSH?
Councilor Osmeña, who heads the committee on budget and finance, said the executive department was not being transparent when it issued the notices of award ahead of the turnover ceremony.
“Why did they (Rama) rush there (Manila) when a turnover was already planned on Friday? They’re not being transparent to the investors,” she said.
The Department of Interior and Local Government (DILG) has issued an opinion, which was used as basis for the Aug. 5 resolution deferring further action on the sale.
It states that the 2012 resolution passed by the city council authorizing Mayor Rama to sell SRP lots through auction cannot supersede the ordinance that specifies the disposal of SRP lots only through unsolicited proposals.
Councilor Sisinio Andales, who moved for the deferment of the turnover, said the issuance of the notices was meant to “preempt” the council’s action and serve as a damage control measure.
He said the DILG opinion should prevail unless it is reversed of modified.