Mayor Rama wants to again pay the SRP loan in full
Cebu City Mayor Michael Rama is making another attempt to get the opposition-dominated City Council to bend to his will that the South Road Properties (SRP) loan has to be paid in full.
The amount has now risen from P2.4 billion to P2.6 billion.
But this time, the mayor is using a statement from the Land Bank of the Philippines to try and convince the City Council, which has blocked his first try to pay off the loan last year, to already do it now.
Rama will submit to the City Council today a P3.38-billion Supplemental Budget (SB), the first submitted by the executive branch this year, to fund various expenses and obligations of the city government, including the payment in full of the SRP loan, which was covered in the shelved SB 1 of 2015.
This year’s SB 1 also uses the same lone fund source — the P8-billion proceeds from last year’s sale of two SRP lots, which have been questioned by the members of the Bando Osmeña-Pundok Kauswagan (BO-PK) who dominate the city council.
“With these precedents, and given that sufficient legal justifications are attendant, I am submitting herewith for your consideration, Supplemental Budget No. 1 CY 2016 for the General Fund Proper, City of Cebu, to cover the full payment of the SRP Loan including interests, documentary stamp expense and other charges and other budgetary items, which are urgent and necessary,” read Rama’s letter to the council.
When the executive department submitted SB 1 last year, the allocation for the SRP loan payment was only P2.42 billion. This time, the proposed loan payment has increased to P2.67 billion.
City Administrator Lucelle Mercado said yesterday that the increase in loan payment was due to the difference in foreign exchange rates.
Rama’s cover letter for the SB 1 this year was dated Feb. 29 but will only be submitted by the Local Finance Committee (LFC) to the city council today.
Feb. 29 was also the same date as the letter that was sent to Rama by Land Bank Vice President Elsie Fe Tagupa, who pointed out a provision of the sub-loan agreement that barred the city government from selling more than 51 percent of the 330-hectare SRP while the loan was still in force, unless the proceeds are used to pay the loan in full.
“Compliance with the above-mentioned provision is required,” read Tagupa’s letter.
The city government sold last year a total of 45.2 hectares (26 hectares to the Ayala-SM consortium and another 19.2 hectare to land developer Filinvest) and received a 50 percent down payment amounting to P8.375 billion.
SRP manager Roberto “Bu” Varquez, however, said that the city government has actually sold a total of 135 hectares of land in SRP, including the 50 hectares that was also bought by Filinvest and developed as a joint venture investment with the Cebu City government.
This means, he said, that more than half of SRP has been sold since only 240 hectares of the reclaimed property are land. The remaining 60 hectares, he said, are still under water, or Pond A.
Last year, Rama had wanted to use P2.4 billion of proceeds to fully pay the SRP loan, but the proposed allocation under SB 1 of 2015 was shelved several times because the council was against using the SRP proceeds, pending the final ruling on a case questioning the validity of the sale.
Reached for comment yesterday, Councilor Margarita Osmeña, who heads the city council’s committee on budget and finance, said she would need to read the new proposed SB1 first.
“We will just wait for it (first). I can’t comment on it (because) I haven’t seen it yet,” she said.
In his letter, Rama also pointed out that when the city government entered into the subsidiary loan agreement with Land Bank in 1996 for the 12.315 billion Japanese Yen loan with the then-Overseas Economic Development Fund of Japan (OECF), the equivalent of it in peso that that time was P2.8 billion.
Rama said that for the past 20 years since the loan was obtained, the city has so far paid P5.6 billion but the loan balance “regrettably remains” at more than P2.4 billion.
He said the increase can be attributed to two economic crises — the 1997 Asian financial crisis and the 2008 great recession which increased the principal loan as it was pegged in foreign currency.
“With pronounced slowdowns in the economies of China and the rest of Asia which loom as potential economic slips of the global community, and in order to avoid further foreign currency devaluation . . . it is imperative that the City Government fully pay its loan with the Land Bank of the Philippines,” Rama said.
He also pointed out that all the documentary requirements for the loan has been complied by the executive department except for the budget appropriation.
These requirements include concurrence from the Bureau of Local Government Finance, Department of Finance, Japan International Cooperation Agency, Land Bank, the Monetary Board and several resolution passed by the council allowing the mayor to negotiate for the prepayment of the loan, he said.
Copies of the documents were attached by Rama in his letter to the council.
The majority bloc of the council has been pointing to a case filed by former prosecutor Romulo Torres questioning the use of the sale of the SRP lots for the SB 1 as the reason why they would not act on SB 1 last year.
But even if he was submitting a new SB this year, Rama stressed it should not be deemed as a “waiver of my firm position that any baseless inaction of SB 1 of 2015 by responsible government officials should be accorded the necessary penalty as may be determined or meted later on.
Aside from the P2.67 billion SRP loan payment, SB 1 of 2016 also includes new appropriations such as the P264 million for several expenses under the Office of the Mayor; payables from previous years, P48 million; construction of a medium-rise building in Palma Street, Barangay San Roque, P100 million; incentives for policemen, P23.4 million; and for lawyers of the Public Attorney’s Office, P520,000.
The additional budget also include the Salary Standardization Law (SSL) differential for the city’s Special Accounts (P15.8 million), and mid-year bonus for City Hall employees (P88 million).
Under the mayor’s office, the executive proposed several projects which include: mayor’s extraordinary or discretionary fund (P6.89 million); rewards for Sinulog volunteers (P4 million); bags and other supplies for teachers, day care and barangay health workers (P5.79 million); incentives for barangay auxiliary force (P9.36 million); vests for senior citizens (P24.15 million); educational assistance program (P170 million); and burial assistance program (P20 million).
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