BEST OFFER. Mayor Benjamin Magalong confers with city budget officer Leticia Clemente on the best way to undertake the development of the Baguio city market which for 25 years has been wanting development. Two proponents are eyeing the grant of the contract to develop the market – SM Prime Holdings Inc. and Robinsons Land Corporation. (PNA photo by Pigeon Lobien)
BAGUIO CITY – Mayor Benjamin Magalong urged on Monday city councilors to approve a public-private partnership lease for the PHP6-billion rehabilitation of the Baguio public market.
“It’s either we go into a PPP-lease or PPP-joint venture,” Magalong said as he urged city councilors to act the soonest to be able to provide for the market vendors.
The latter option is where the city government and the proponent will jointly go into putting up the market.
Magalong and city budget officer Leticia Clemente appeared on Monday afternoon before the city council’s regular session and provided modules that could be the choice on how the city market will be developed.
Clemente based the projections on a PHP6 billion, seven-story building that will have a two-story parking lot at the basement, two floors for market vendors, and the rest for commercial spaces.
The model was a city council approved design made by a private group.
Using comparative financial projections, Clemente said the city could go into equity financing or own fund sources where the city could get back its investment in 10.91 years.
On the other hand, a debt financing scheme for the city could give a payback year of 13.85 years.
A PPP on a lease scheme, on the other hand, has a payback year of 17.64 years wherein the city will own two floors for the public market using the three-hectare lot and based on the highest rental rate.
A PPP- joint venture, on the other hand, has payback years of 20.24 years.
Magalong, however, doused all expectations as the first two options may look the most profitable for the city as Baguio does not have the financial capability to undertake any of the two.
That will mean, the city has to use its annual developmental fund of PHP200 million “sacrificing” all other important projects that are earmarked under the said fund.
“Unless if you like to sacrifice all-important projects under the developmental fund which we will use to finance or pay up debt,” said Magalong.
“It is like oranges and apples, the only comparison is a PPP-lease or PPP-joint venture,” he said.
Magalong said the city council needs to authorize the Public-Private Partnership for the People (P4) screening committee tasked to evaluate proposals for the market upgrade.
He pointed out the committee, chaired by city administrator Bonifacio dela Pena, is still determining which of the companies – SM Prime Holdings Inc. and Robinsons Land Corporation – will be granted the Original Proponent Status (OPS).
The two companies have separate proposals in the best way to undertake the project through either a PPP-lease or PPP -joint venture.
From there, if the parties agree – city and proponent – a term of reference will be adopted that will still undergo another process where any other proponents could challenge the “best proposal” or a “Swiss Challenge”.
Under the challenge, other interested developers can still bid.
The OPS, however, can match the winning bid for the right to develop the market.The entire process will take at least eight-months, dela Pena said. (PNA)