CEBU, Philippines — The five-man committee at the Cebu City Council that scrutinized a proposal to build a P18 billion integrated resort on Kawit Island at the South Road Properties did not recommend that a deal be signed for the project.
In its 14-page report, the committee, instead, proposed amendments to the supposed Joint Venture Agreement that the city will enter into with Universal Hotel and Resorts Inc.
“UHRI shall justify the basis in proposing the 10 percent (shopping mall, hotel and bare-shell integrated resort) and 15 percent (casino) share of the city from the gross rental revenue,” a portion of the committee’s report reads.
The committee is composed of Councilors Renato Osmeña, Jr. as chairman and Councilors Jose Daluz III, Raymond Alvin Garcia, Sisinio Andales, and Margarita Osmeña as members. For six days, they conducted hearings to discuss the technical, financial, and legal aspects of the proposed development.
It proposed that the joint venture agreement indicates that the contract between the city and UHRI shall be for 50 years and, upon mutual negotiation, shall be extended to 25 years.
The committee also proposed that the development should be completed within eight years. If it is not completed after the eighth year since the contract was signed, the P1.8 billion performance bond will be forfeited in favor of the city government.
The committee said UHRI will have no rights to apply for foreshore lease and the right to reclaim any portion of the leased property.
The committee also wants that the contract stipulates that all improvements on Kawit Island shall be turned over to the city after the joint venture agreement expires and that UHRI should comply with all requirements of the Office of the Building official and other regulatory requirements, among others.
The committee has agreed to propose to include provisions in the proposed joint venture agreement, such as specification of the P18 billion investment for horizontal and vertical development, submission of a bank guarantee or letter of credit issued in the name of UHRI to finance the P18 billion project, valuation of leasable spaces of the project by the Land Bank of the Philippines, and for the Commission on Audit to determine the value of the contribution of the city government.
To protect the rights of the city government further, the committee has also proposed that the agreement specifies the total lease space of the project; to state that UHRI will pay all taxes like the business tax, real property tax, and other city’s regulation of business activities; and for it to that UHRI submits quarterly income reports to the city government.
For his part, Mayor Tomas Osmeña said councilors who are not his allies will find a way to block the P18 billion development.
He said he will study the report once he receives a copy.
“We’re not the only game in town, you know. We’re trying to bring in investors. If we’re too strict in what they’re doing, they’ll walk away,” he told reporters.
Normally, he said, the contract will be re-negotiated after five or 10 years before the agreement ends to know if it will be extended or not.
Osmeña said his concern is that the city government is not asking for a fix amount for the lease of the city’s property where the integrated resort will be developed, stressing that the city will get more income as UHRI will increase its earnings every year.
Under the proposed agreement, UHRI will lease the city’s property by paying 10 percent of the gross real estate rental revenues from commercial/shopping center and the parking lots; 10 percent of gross real estate rental revenues from the integrated resort; 15 percent of gross real estate rental revenues from the casino facility; and 10 percent of the gross real estate rental revenues from hotel rooms.
The development includes a commercial or shopping center, integrated resort, casino facilities, hotels and parking facilities on the nine-hectare Kawit Island. — /JMO (FREEMAN)