Lapu-Lapu officials pawn city hall to obtain WB loan

CEBU CITY -- What price progress?

Citing a need to build a sewer system, the city go-vernment of Lapu-Lapu is trying to secure a P200-million loan from the World Bank.

But opposition councilors, smelling something foul, want the loan negotiations stopped because of its ra-ther unique collateral: City Hall itself.

That's not all. Aside from the 8,605-meter property, the city is also putting up its internal revenue allotment and other earnings as collateral. The loan is to be paid in 16 years.

The minority bloc, composed of councilors from the Probinsiya Muna Development Initiative (PROMDI) party, tried to block the deal but got outvoted by the majority LAMP bloc.

Because of the huge risk involved, rifts broke out in the majority bloc. They unseated a partymate as majority floor leader and another of her commitee chairmanship for questioning the loan.

Corazon Ouano, stripped of her public works committee chairmanship, retaliated with a privilege speech calling her colleagues "bootlickers."

The sewer project is a pet project of the mayor.

Councilors opposing it have accused the majority bloc of railroading the resolution authorizing Mayor Ernest Weigel Jr. to enter into a contract with the World Bank.

They claimed they were not given sufficient time to scrutinize the documents when the resolution was "instantaneously approved" last week.

Eugene Espedido said he had yet to see other documents including the real estate mortgage papers and the loan agreement itself between Landbank which is the depository bank in the transaction and the World Bank.

Under the loan terms, the minority said, the city will allocate nearly all of its income to pay the loan, leaving nothing for basic services.

The proposed amortization schedule states that the city will pay P1.5 million quarterly.

"Sixteen years is too long and that will tie the hands of the future administration. We are exposing the city government to so much risk."

The newly appointed majority floor leader, Eusebio Santiago, said the city is capable of paying the loan.

"If we do not put up this project now," Santiago said, "our children's children will continue to suffer for lack of infrastructure," Santiago said.

As for the prospect of the bank auctioning off city hall, Santiago simply said: "They cannot foreclose City Hall. That will never happen."

But Gov. Pablo Garcia disagreed, saying there are risks in using public property as collateral in loan agreements. "They have to be careful," he said in a separate interview.

The PROMDI councilors have asked the provincial board to stop the loan deal. But board member Victor Maambong said there are no prohibitions mortgaging public property, including city halls. But just the same, they will carefully review the city council resolution and the supporting papers once submitted to them for approval.