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?