BCDA willing to allow Camp John Hay Dev’t to restructure rental payments

Taking cognizance of the depressed economic situation, the Bases Conversion and Development Authority (BCDA) is willing to give more leeway to the Camp John Hay Development Corp. (CJHDC) to restructure its rental payments.

BCDA president and chief executive officer Rufo Colayco said the CJHDC is in arrears to the BCDA amounting to P700 million.

Colayco said the BCDA is willing to accept payment in the form of "some cash and some assets."

"Because of the current economic situation, the BCDA would have to be more flexible in setting repayment terms, " Colayco said.

"At the same time, the BCDA will continue to protect the government’s interest and preserve its relationship with the CJHDC’s investors," he added.

CJHDC’s original lease agreement with BCDA on Oct. 19, 1996 was to develop almost 247 hectares of Camp John Hay into a tourism complex, multiple-use watershed and human resource development center for a term of 25 years, renewable for another 25 years, for a total of 50 years.

The lease agreement provided for a fixed annual rental of P425 million or five percent of gross revenues, whichever is higher, for the first five years of the lease period.

But because of the 1997 Asian financial crisis, the original plans for Camp John Hay has had to be revised.

CJHDC is the corporate vehicle created by the Fil Estate Group and a few other investors to hold the lease for the former US recreational facility in Baguio City.

Because of the economic downturn, CJHDC encountered problems in meeting its rental payments to BCDA.

According to Robert John Sobrepeña, CJHDC has basically complied with the original lease agreement.

It made an advance payment of P250 million on Oct. 19, 1996 and the first annual lease rental of P425 million was paid on Oct. 18, 1997.

Another P50 million in cash, Sobrepeña said, and P75 million in golf shares and properties was paid by CJHDC upon execution of the July 14, 2000 MOA.

Sobrepeña said CJHDC has paid a total of P800 million by way of lease rentals to the BCDA to date.

Likewise, Sobrepeña said, CJHDC has already complied with its commitment to invest P2.2 billion.

CJHDC has been unable to complete the development of Camp John Hay as originally scheduled due to a number of reasons, including the delay in putting under CJHDC’s effective control and possession portions of the leased area under the control and possession of other entities; delay in the issuance of the Environmental Clearance Certificate (ECC) as prescribed by the Department of Environment and Natural Resources; delay in the issuance of the implementing rules and regulation of the MOA and the Customs Administrative Order by government agencies; protracted demolition of structures inside Camp John Hay which is the responsibility of BCDA and the John Hay-Poro Point Development Corp.; and litigation of cases filed by project oppositionists.

Aside from those factors, Sobrepeña said, there were other developments that overtook the project.

These included the deterioration of the peso-dollar exchange rate which in 1996 was just at P26 to $1 and which has since deteriorated to P51 to $1.

Even the weather was cited as a cause for the delay in the development of CJH.

The CJHDC has already developed and delivered the golf facilities and about 50 cabins.