Condominiums under construction by Filinvest Land Inc. and the soon-to-open SM Seaside City are among the large-scale commercial developments in the South Road Properties.
This the second commentary of finance consultant Sabino R. Dapat about the South Road Properties (SRP) as the bone of contention of the City Council’s prolonged budget impasse.
Shades of the Freedom of Information Bill (still languishing in Congress): the Cebuanos have a right to know what the SRP or South Road Properties is all about.
How did it come about? Who owns it? Why was it built? Why the continuing quarrel of our political leaders about what to do with it, wasting precious time to free Cebu from the bondage of debt?
All these questions can be answered by a simple financial report that Cebuanos can demand from the Cebu City government, a report so simple that it can be understood by a high school graduate with a minimum degree of guidance.
If all the information would be given to me, I would volunteer to prepare such a report. Even members of the City Council who were not yet born when the SRP project was conceptualized would be able to comprehend clearly why we should make the project work for the economic wellbeing of Cebu and the Cebuanos.
The financial report may be divided into the following captions:
a) A brief history of the project, how it was started, who are its sponsors, who or what are its funding agencies and what are the conditions of its loan. What risks, if any, are Cebu and the Cebuanos exposed to?
b) CASH RECEIVED, the obvious periodic releases of the loan as projected in the financial feasibility study as well as other financial sources.
c) CASH OUTLAYS, the continuing capital outlays of the project.
d) EXCESS OR DEFICIENCY OF CASH RECEIVED OVER OUTLAYS. If it is an excess, where did the excess money go? If it’s a deficiency, how was the deficiency covered to complete the project or were there phases of the project that were foregone or left out to be completed when funding is available?
The movement of the SRP loan over the years is an entirely different story. A separate financial report should be prepared and done for the benefit and information of Cebu and the Cebuanos as the real owners of the SRP. As owners, they have the right to know, as guaranteed by the Constitution.
It might be worthwhile to emphasize that at one time, the loan ballooned to about 100 percent of its original balance because of the 1997 Asian Financial Crisis.
Many of our fellow Cebuano businessmen lost their shirts because of that economic inflection point. The loan became so difficult to pay and if there was a risk of default, the Cebuanos would have taken the hit and been shamed.
The repayment of the loan (or its servicing) should also be clearly summarized, especially the enormous amount of money taken from the city coffers or Cebuano taxpayers’ money to pay the ballooning debt.
Any student in accounting would tell us, without exception, that the owner or stakeholders of any business enterprise or any business activity are the ones who made the investment or the ones who made the financial contributions to keep the business enterprise or the business activity going.
Isn’t it clear enough that the owners of the SRP are the Cebuanos because of the use of tax money to service the loan?
Why should some people act like they own the SRP?
If we go through a referendum about the SRP, I can anticipate that Cebuanos would opt for the repayment of the remaining loan balance. Why? Because it’s the most prudent thing to do.
In the interest of time, I will write later about the Project’s economic benefits for Cebu and the Cebuanos with the hope that experts in real property development would manage the remaining land of the SRP well.
(Editor’s Note: Ben Dapat, who does consultancy work for business and finance management, is a retired partner of SGV & Co./Arthur Andersen & Company and former president of the Cebu Chamber of Commerce and Industry. He is also vice chairman of the Cebu Citizens-Press Council)
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