Sale from SRP lots to fund city’s 2015 budget

CEBU, Philippines - The massive appropriation for Cebu City’s proposed 2015 Annual Budget is projected to be sourced from the sale of lots at the South Road Properties amounting to P9 billion.

With the sale, Councilor Noel Wenceslao said the city can actually earn “extraordinary income” from city’s prime property, which is a prime property set on a reclaimed land along the city’s east coast, to fund a bulk of next year’s annual appropriations.

Wenceslao said this is possible considering that the City Council has already authorized Mayor Michael Rama to negotiate and dispose of – by sale through public bidding to interested investors and developers – the 45.2 hectares of land at the SRP.

“There’s an extraordinary income which is not usual revenue for every year from SRP because there was already an authority to dispose it as compared before that there was none,” he said.

With several developers interested in purchasing and leasing portions of SRP, the property is a “good” source of fund for the annual budget.

“…it’s up to the executive on how they execute that (lot disposal). But, I believe there are so many players who are interested to buy SRP lots. It’s really up to the executive how they will convince the council (to approve the proposed annual budget). Even if the budget is high but they can justify it really well, everything will be in order,” he said.

Aside from the SRP lot, domestic borrowing is also one of the identified sources of income that can generate up to P3.1 billion.

A new borrowing is akin to restructuring, Wenceslao pointed out. 

Wenceslao said once the city’s amortization loan will be restructured and converted into peso-denominated loan from yen, the city can save from fluctuation cost and interest rate, which is P3.1 billion or even higher than the projected amount.

 “With the conversion, we would have lots of savings because there will be no more fluctuation costs and other fees, we just have to convert our loan,” he said.

Cebu City was granted a 12.315 billion yen (P5.3 billion) loan by the Japan Bank for International Cooperation to undertake the 300-hectare South Reclamation Project. So far, it has paid P2.7 billion. The loan will mature in 2025.

 Wenceslao, however, said the foreign borrowing is only considered as contingency fund source anticipating on the success of the loan conversion.

“That’s a good project but that’s already a fallback that we can convert it. There’s no fresh fund coming to Cebu City,” he said.

 Others were sale of land assets, such as the North Reclamation Area with P1 billion and the Inayawan landfill with P340 million and the city’s share from joint venture and other activities (P50 million); real property and business taxes from SM Prime Holdings (P349 million) and Filinvest Land, Inc. (P141 million); and sale from auctioned real properties (P50 million).

Apart from these, other identified sources were tax revenue (franchise, business, community, property, among others) worth about P3 billion; regulatory fees, business and service income, revenues from income generating city departments totaling to P770 million; and external sources that include shares from national internal revenue taxes, national tax collections, and the like amounting to P1.5 billion.

On the other hand, a P25-million intelligence or confidential fund has being proposed under the 2015 Annual Budget, which covers the “peace and order” matters of the city.

Rama said the inclusion of intelligence fund in the annual budget is “what is ought to be and what is right.”

Under the law, intelligence fund shall not exceed 30 percent of the total amount allocated for peace and order, or three percent of the total annual appropriations, whichever is lower. – (FREEMAN)