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Section 302 of RA7160 Local Government Code on BOT

SECTION 302 OF RA7160 Financing, Construction, Maintenance, Operation, and Management of Infrastructure Projects by the Private Sector(BOT). (c.) projects implemented under this Section shall be subject to the following terms and conditions. 1. The city engineer as the case may be, upon formal request in writing by the local chief executive, shall prepare the plans and specifications for the proposed project, which shall be submitted to the Sanggunian for approval. 4. The contractor shall be entitled to a reasonable return of its investment in accordance with its BID PROPOSALS as accepted by the local government unit concerned. In the case of a Build Operate and Transfer agreement, the repayment shall be made by authorizing the contractor to charge and collect fees, rentals and charges for the used of the project facility NOT EXCEEDING THOSE PROPOSED IN THE BID AND INCORPORATED IN THE CONTRACT.

VM gives guide questions to SP Members on their evaluation of the Magsaysay Park bidding

Sangguniang Panlungsod Members are requested to individually explain their reasons for voting on the Build Operate Transfer project awarding of contract to Metrostate Corporation thru a Resolution Authorizing the Mayor to enter into a contract with Metrostate Corporation. The Sanggunian is in receipt of a letter from the Regional Development Council Secretariat stating that RDC EXCOM Resolution 66 is a resolution prepared by the secretariat that shall be ratified by the Executive Committee once it shall be convened. The letter also stated that it shall be the Executive Committee that shall submit it to the Regional Development Council en banc who shall ratify said Executive Committee Resolution. So far the Executive Committee has not yet convened itself that is why it is only the secretariat that prepared the resolution. As regards the Financial Statement that is required, the Sanggunian Panlungsod did not approve of any contract that shall be bidded out as basis for the comparative bidding of interested BOT operators. Stated in the Contract are the minimum designs, performance standards and economic parameters including discount rates, inflation factor, foreign exchange rates among others. Reasonable Rate of Return A reasonable rate of return on investment shall be determined by the LGU or Negotiated BOT Contracts and/or CALLS FOR PROPOSALS by the concerned LGU. In setting the rate, LGU shall consider the following information as may be gathered from the prospective BOT project proponent and/or prevailing in the international and domestic market/industry. A. DEBT/EQUITY RATIO B. INTEREST RATE ON BANK LENDING C. RETURN TO SHAREHOLDERS, among other things. For Negotiated contracts of public utility BOT projects that are monopolies, the reasonable rate of return on rate base should not exceed 12%. The scope of the review/approval of BOT projects shall focus on the following:  Inclusion of the BOT project in the list of Development Projects of the LGU.  Economic Viability of the BOT project, which shall be evaluated against a hurdle rate officially adopted.  Financial Viability of the BOT project. o The analysis of the financial indicators shall be the basis of LGU decisions on the appropriateness of the BOT financing scheme for the project. The Present Value(PV) of the project net cash flow (that is why there is a need to determine the rates of fees rentals and charges the operator is to charge its future tenants) and the Financial Internal Rate of Return (FIRR) of the project on the equity involved and to the government, where government support is involved(involvement is the Huge Magsaysay Park lot that is to be used in the BOT project), shall be computed.  Risk/sensitivity analysis of the financial indicators. o The sensitivity analysis should at least consider the following scenarios: (i) increased in project cost by 10 and 20 percent, (ii) decreased in projected revenues by 10 and 20%, and (iii) combination of (i) and (ii).  Indication of preparedness including PUBLIC ACCEPTABILITY of the BOT project. o Project preparedness shall be assessed against potential right of way problems, availability of relocation plans, and any potential legal and technical issues, among other things. A report on PUBLIC CONSULTATIONS as maybe conducted by the concerned LGU as part of its project preparation activities maybe submitted by the Local Sanggunian(representing the ICC) for information and reference.  Justification of the choice of contractual arrangement as defined in Section2(a) of RA7718, when such information is available. SUBMISSION of BOT proposals to the Local Sanggunian(ICC) for evaluation/approval shall include the following Feasibility Study Accomplished ICC (local Sanggunian) Project Evaluation Form Endorsement by the Regional Development Council Environmental Compliance Certificate Location Map FOR INTERESTED BOT OPERATORS, EXPERIENCED AND TRACK RECORD ARE MANDATED, the proponent must have sufficient experience in the relevant aspect of schemes similar or related to the subject project as specified by the LGU. THE LOCAL SANGGUNIAN prior to issuance of invitation for comparative proposals must approve the contract during the prebid( please refer to process flow of Public Bidding for BOT Law RA7718). Approval of the CONTRACT may be secured while the bids are being prepared. ISSUES THAT MUST BE SETTLED and responded individually by the members of the Sanggunian prior to the approval of resolution. In the case at hand there was no contract approve by the Local Sanggunian prior to bidding. Said Contract must reflect what is required by RA7718. 1. Was the Local Sanggunian requested for its approval of the proposed contract prior to bidding? 2. When was the contract given to the Sangguniang Panlungsod? 3. Who prepared the contract that is now being requested an authorization from the Sanggunian? 4. Did the contract include all requirements mandated by Law? 5. The most important aspect of the contract is the Financial Study, was the financial study reflected in the contract particularly on the rates that shall be charged future tenants? 6. Cashflow of the project will be reflected by cash outflows such as the lease rental rates, maintenance and operating expenses, miscellaneous expenses and most importantly the cash inflows which shall be determined by the rental rates, fees, charges to be charged the future tenants, was this requirement included in the proposed contract? This is necessary in the computation of acceptable rates of return as mandated by RA7718. 7. In the manner of PCAB license requirement, it was the SBAC that required this and disqualified Gama Construct. If it is not required, why did the SBAC disqualify Gama Construct? 8. Does Metrostate have the experienced and track record mandated by law being a corporation that is 3months old? 9. Did Metrostate show financial capability on addressing the financial requirement of the project? 10. How do we deal with Metrostate not being the personality that was pre qualified and qualified? 11. How do we deal with RDC ExCom Resolution 66 which was only prepared by its secretariat on November28 after the bidding has been completed, that said Reso66 is still needing ratification by the Executive Committee once it shall be convened? It is also subject to ratification by the RDC en banc once it shall convene itself. 12. Was there any Public Consultation done to determine public acceptability? 13. Is a Rebidding in order?

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Investment Code of Dagupan

The Sanggunian Panlungsod of Dagupan City is currently tackling a major ordinance, the INVESTMENT CODE of DAGUPAN, that may change the landscape of investment opportunity in the city. The City of Dagupan is about to acquire all accreted foreshore land in the city of Dagupan via the MLA with the intention of making it a Special Economic Zone. The city as of the moment has limited financial resources and has maximize the allowable limit in loaning its IRA and existing Real Properties. There is a need to be creative and entice investors to invest in the economic zone to make it a reality. SECTION 2 of the Investment Code states

“ Declaration of Policy. –to jumpstart and accelerate the economic development of Dagupan City and Improve the quality of life of its people in accordance with the city’s comprehensive development plan and zoning ordinance, it is hereby declared to be the policy of the city of Dagupan to encourage new investments or expansions/diversification in agri-business activities, e.g. fish processing plant, canning/packaging of fish products and fruits; tourism facilities like mid-range hotels, hostels, beach and golf resorts; transshipment facilities including, but not limited to, port infrastructure and common bonded warehouses; miscellaneous light manufacturing activities such as garments, footwear, furniture, kitchenware, etc., information and communication technology related services such as call centers, business process outsourcing, property development areas of investments as may be determined from time to time, which will provide employment opportunities, raise the standard of living of the people of Dagupan City, and provide for an equitable distribution of wealth.”

The City of Dagupan welcomes and encourages domestic and foreign capital to establish enterprises and business operation either as a principal office or branch that would utilize substantial amount of labor, raw materials and natural resources of the City. The City shall encourage and promote the establishment and operation of non-government organizations to serve as active partners in achieving local development and autonomy. CHAPTER VIII. INCENTIVES TO REGISTERED ENTERPRISES SECTION 21. Tax Incentives to Registered Enterprises. –In addition to the incentives provided by law e.g. Omnibus Investment Code and by the local Government Code of 1991, a registered enterprise qualified under this Code shall enjoy the following tax incentives: a. Within three (3) years from the start of commercial operations, a registered enterprises under this code shall be fully exempt from the Mayor’s permit fees, building permit fess, business sales taxes, and other fees and charges imposed under existing city ordinances; b. Exemption from the basic real property tax due the City, excluding the barangay share and SEF, under the City Revenue Code for a period of two (2) years from the affectivity (accrual) of its real property tax. c. In no case shall the registered enterprise avail of these incentives for a period of three (3) years. SECTION 16. Qualifications of Existing Enterprise. – An existing enterprises may avail of the incentives of this code provided that it meets the following requirements: a. That the business enterprise must have complied with all the requirements mandated under existing local and national laws and Constitution; b. That the expansion/diversification must engage in activities mentioned in Section 2 hereof or in other preferred areas of investments as may hereafter be declared by the Board; c. That the existing enterprise whose place of operation or production is already located within the territorial jurisdiction of Dagupan City, but which will undertake any of the following activities/projects; i) Relocates its principal office from the places in the Philippines to Dagupan city; or ii) Expand its existing production capacity or construct new buildings and other civil works for the installation of new machinery and equipment or improvements thereof which will result in an increase in its production capacity and increase manpower requirements. d. That the expansion/diversification shall have a capitalization of at least One million Pesos but less than Ten Million Pesos in case of a small-scale enterprise; at least Ten Million Pesos but not more than Forty Million Pesos in case of a medium- scale enterprise; and more than Forty Million Pesos in case of a large industry; provided, that the amount of capitalization shall be based n the total project cost of such expansion/diversification as stated in the investor’s project study submitted to and approved by the Board; e. That the expansion/diversification shall provide out of its labor force requirement, an employment of no less that ten (10) persons in case of a small- scale enterprise; at least twenty (20) persons in case of a medium-scale enterprise; and at least one hundred (100) persons in case of a large industry, who are bonafide residents of Dagupan City. SECTION 17. Application Requirements. – Application shall be filed with the Center duly recorded in a registration book and the date appearing therein and stamped on the application shall be considered the date of official receipt thereof. A non-refundable filling fee to be determined and set by the Board shall be paid together with the following documents for registration: a. 3 copies of completed application form to be provided for by the Center in accordance with the provision of this Code. b. A copy of the complete project study of the proposed investment showing the project is economically, technically, and financially feasible and viable; c. A certified true copy of its Certificate Registration, Articles of Incorporation and by-Laws with the Securities and Exchange Commission and Business Registration with the Department of Trade and Industry, in case of single proprietorship; and d. Resolution of the applicant’s Board of Directors, in case of a corporation or partners I case of partner ship, authorizing the filing of application. SECTION 15. Qualifications of a New Enterprise. – New investors who intend to avail of the incentives provided in this Code must meet the following qualifications: a. That the business enterprise must have complied with all the requirements mandated under existing local and national laws and Constitution; b. That the prospective investor’s place of operation or production be located within the territorial jurisdiction of Dagupan City. c. That the prospective investment must engage in activities in preferred areas of investment as may hereafter be declared by the Board; d. The new enterprise must have a capitalization of at least One Million Pesos but not more than ten Million Pesos in case of a small-scale enterprise; and more than Forty Million Pesos in case of a large industry ; Provided , that the amount of capitalization shall be based on the total project cost as stated in the investor’s study submitted to and approved by the Board; and e. That the new enterprise will provide , out of its labor force requirement an employment of no less than ten (10) persons in case of a small-scale enterprise; at least twenty (20) persons incase of a medium-scale enterprise; and at least one hundred (100) persons incase of a large industry who are bonafide residents of Dagupan City. CHAPTER IV. DAGUPAN CITY TOURISM AND INVESTMENT PROMOTION CENTER SECTION 8. Dagupan City Tourism and Investment Promotion Center (The Center). – There shall be created an office known as the Dagupan City Tourism and Investment Promotion Center, which shall be staffed by one (1) Executive Assistant-III, one (1) Economist, and one (1) Economic Researcher. The Center shall be attached as regular division of the Office of the Mayor and coordinate closely with the City Planning and Development Coordinator and City Treasurer. QUESTIONS AND CLARIFICATIONS that need to be settled via a Public Hearing so Dagupenos will feel that this INVESTMENT Code was made by them for the City of Dagupan and its people. Participation of the citizenry is required. 1. How much will the CITY lose in actual income from the existing Businesses that are already registered in the CITY? As of the moment can the city afford this? Can we ask the assessors office who has records of the RPT? Can we ask the Treasurer who has records of the collections for Permits? Can we ask the Budget officer who has records of what needs budgeting? 2. Do we have a computation on the potential businesses still available to fill the existing demand of the industry like Tourism? Questions like, How many beds are still needed? Where are the other Areas for development other than the Special Economic Zone? Are there local landowners willing to develop there area as Economic Zones? Can we ask the Tourism Officer and City Planning to discuss this? 3. Do we have a forecast of the possible expansion of these industries via this Investment Code? Can we ask for a Public Hearing to be attended by the different existing operators of what they can offer and what they think is needed to improve the existing industry? 4. For totally new industries THAT SHALL MAKE DAGUPAN GREAT at par with SINGAPORE, we see no problem in it as this shall not affect the existing income of the city. Existing industries only need to justify the need for this and show the potential income it could generate for the city and for them that shall make their industry grow. WE NEED THIS INVESTMENT CODE. WE ASK THE PEOPLE OF DAGUPAN TO PARTICIPATE IN THE CRAFTING OF THIS LAW.

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Clarification on alleged Land Grabbing of Tondaligan Park and Dagupan City Foreshore Lands

Lands of Public Domain are not subject to the appropriation and outside the sphere of commerce. They are intended for public use (unless The Contrary is EXPRESSLY DECLARED BY LAW and for the benefit of those who live nearby). Any illegal occupation is a mere detainer subject to suits. Section6 of Republic Act 170 creating the City of Dagupan states that the Jurisdiction of the City for Police purposes shall be extended 3 miles from the shore to the Lingayen Gulf. On February 12,1997, the Supreme Court GR 68166 stated, On the Titling of Accreted Land, the Court RULES and INVOKES Article4 of the Spanish Law of WATER of August 3,1866, to establish the FACT THAT THE FORESHORE AREAS CONSTITUTE PUBLIC LANDS, i.e, "Lands added to the shores by accretions and alluvial deposits caused by the action of the sea, form part of the PUBLIC DOMAIN. WHEN THEY ARE NO LONGER washed by the waters of the sea and ARE NOT NECESSARY FOR THE PURPOSES OF PUBLIC UTILITY, or the ESTABLISHMENTS OF SPECIAL INDUSTRIES, or for the Coast Guard Srvice. THE GOVERNMENT SHALL DECLARE THEM TO BE THE PROPERTY OF THE OWNERS OF THE ESTATES ADJACENT thereto as increment thereof." There is a need for the government TO DECLARE and to waive its right to use the public property before an application from the adjacent estates is granted. As early as 1952 via Resolution 53 submitted to the Lands Management Bureau, the Sangguniang Panlungsod opposed all applications of leased in the foreshore land of Dagupan known as the Blue Beach. Our constitution limits Alienable and Disposable Public Land to AGRICULTURAL LAND. FORESHORE LAND COULD NOT BE SUBJECT TO CADASTRAL PROCEEDINGS. A FORESHORE LAND RETAINS ITS RIGHT AS PROPERTY OF THE STATE. As per RA 7160 or the Local Government Code, the DENR is required to consult and inform the LGU who has jurisdiction over Public Lands. Any GRANT of permit over Forshore and shore land areas are subject to consultation with the LGU since the LGU HAS FIRST RIGHT TO THE USE OF PUBLIC LANDS. Foreshore lands are not considered to be agricultural land. ONLY AGRICULTURAL LAND are SUBJECT TO CERTIFICATES OF ALIENABILITY and DISPOSABILITY by the government. Please be informed that starting in the year 2005, all Foreshore accreted area in the city of Dagupan were surveyed for in the name of the City Government of Dagupan and applied for a Miscellaneous Lease Application and have already been processed upto the Regional Level. The next step is for the Secretary of the DENR to approve of it and it shall already be in the name of Dagupan via the MLA. All occupants of the accreted land in the Bonuan Shore are deemed as Illegal Occupants. The DENR has already cancelled all Certificates of Alienability and Disposability to it as AGRICULTURAL Land. All occupants WHO APPLIED FOR IT AS AGRICULTURAL LAND, ISSUED A CERTIFICATE OF ALIENABILITY AND DISPOSABILITY BY CENRO are already deemed as Illegal Occupants. These cancellations are necessary for the CENRO and PENRO to process the City's application for the MLA for the entire Foreshore accreted land of bonuan which have already been done up to the Regional Level. The City and the Sanggunian Panlungsod in 2005 have taken the positive step of acquiring the Lands that shall be used for the Special Economic Zone. The city will never tolerate any Landgrabbing! The city has all the right to apply these lands for its acquisition and develop it for a Project that shall generate Economic Opportunities and promote social equity through a sustainable use of an ecologically balanced environment supported by DENR Administrative Order 2004-24 Governing the Administration and Management of Foreshore Lands. This is also to clarify that there is no Land Grabbing inside Proclamation 98 or inside the Tondaligan Park other than the admission of OIC PENRO Rogel Pimentel that the CENRO made a mistake of issuing a Certificate of Alienability and Disposability in an area of less than 1,000 square meters inside Tondaligan Park. He also stated that the CENRO immediately cancelled said Certificate. If there shall be LAWSUITS to be filed in court NOW, it shall be the ILLEGAL Occupants versus those who they transacted to be awarded a Certificate of Alienability and Disposability. The city as of the moment is seeking the assistance of the CENRO and the PENRO in the processing of its application. The City is only awaiting the Approval of DENR Secretary in ALL ACCRETED FORESHORE Land to be in the name of Dagupan via the MLA hopefully before the end of 2006. If the Government shall be filing Lawsuits, it shall be to ascert its right and claim back foreshore lands that have been TITLED to private entities who applied for them as Orchard Land or Agricultural Land. Land behind the Tondaligan Park are no longer considered Foreshore Land. Land adjacent to the Tondaligan Park or in front of Tondaligan Park going to the sea are considered as Foreshore Land. Sgd. VM Alvin Fernandez