Is Iloilo City headed toward a property bubble?

It’s not that I don’t want Iloilo City’s economic development to screech to a halt. But looking at the frenetic infrastructure projects now undergoing construction (private sector development), I am worried that this would lead to a property bubble. At the pace new condominiums and malls are being built, there is a real danger supply would overtake demand, and many developers will be left holding an empty bag.

The retail market, for instance, is not big enough to warrant the operation of more stores in Iloilo City. The present retail floor space that are available for rent is already more than what the market could accommodate. Just recently, SM City opened its new wing, and many store spaces are still empty. That’s not to mention a number of restaurant closures in the giant mall.

Robinson’s Mall is opening another complex in Jaro at what used to be the campus of the De Paul College. Atria has gone full blast in its operations, mostly with restaurants in Barangay San Rafael. The Florete Group of Companies is rushing the completion of its Plazuela II along the Benign Aquino Jr. Avenue. Meanwhile, Megaworld is also going full swing in its construction of its strip malls in the Iloilo Business Park.

Filinvest and Ayala Land are also racing with each other to build condominiums within a 2-kilometer radius in Mandurriao. Not too far away are condominiums of Megaworld. Also about to commence construction is the mixed-use complex of Gaisano in Bolilao, Mandurriao.

Smaller malls have also been put up in other parts of the city. Double Dragon Properties Corp. has opened its City Mall in Barangay Tagbac, Jaro. Another City Mall is slated to break ground in Barangay Ungka, Pavia before the middle of 2016. A third City Mall is going to loom large over the scenic Guimaras Strait as part of the Parola Ferry Terminal. The group of Alfonso Tan is now operating GT Mall near the Molo Plaza.

There is no mistaking that development is taking place at breakneck speed in Iloilo City. A quick glance at all these activities couldn’t fail to impress the observer. But we need to learn lessons from history — business history. Property bubbles are always a danger when development takes place at such high speed. The demand might not be able to sustain the market supply’s growth.

Among the developers, I find the Double Dragon strategy of locating its new malls in the periphery of the city more prudent. It avoids the potential congestion that might only worsen the already bad traffic situation on the Iloilo Diversion Road (aggravated by poor traffic management practices of the LGU). And as the City Malls are situated in the outskirts, they will be able to snare much of the people who want to avoid the traffic.

Of course, these developers didn’t just jump into pouring hundreds of millions of pesos in investments for malls and condominiums without extensive feasibility studies. That the developments are concentrated in the Mandurriao district seem to follow the model of Metro Manila, where malls and condominiums are built in concentric circles. The residences are  always a stone’s throw away from restaurants and shops. This is the model in Alabang, Eastwood, Greenfield in Mandaluyong and many more.

What I fear is that the buying power of Ilonggos might not be enough to fuel this growth. Even in the number of restaurants that have opened for business, one can easily see that customers flock to the newer ones, leaving the older restaurants with fewer diners. The dining market base hasn’t grown that much to make the opening of more restaurants viable. It’s the same way with shoppers.

I would want to see this growth sustained. The LGU should be laying the foundation for increasing the buying power of its people. Unfortunately, that is not happening. There are no industries that could provide good paying jobs for the people. If there are jobs being created, these can be found in the services sector — restaurants, retail outlets, call centers. This will fall short of what is needed to sustain this growth.

Our leaders should take steps to avoid a meltdown. They should not be lulled into a false sense of achievement. The public investments are being poured into the wrong areas. We are not building the necessary infrastructure for sustained development. The crash can happen sooner than anybody might expect.

 

An ICC on a silver platter?

IloiloCenter1Is the Iloilo Convention Center going to be offered to Megaworld on a silver platter?
This question has occupied my mind since I received a letter from Atty. Joy M. Bulauitan, Assistant Chief Operating Officer of the Tourism Infrastructure and Enterprise Zone Authority (TIEZA), last week informing me that the agency conducted two biddings for the management of the ICC, and that both resulted in failed bids.
Yesterday, I wrote Atty. Bulauitan another letter asking whether TIEZA intends to conduct a negotiated bidding for the contract, which is the logical move after two failed biddings. There seems no hurry now on the part of TIEZA to find a private sector partner to operate the ICC.
Why is this a cause for worry?
That’s because the Deed of Donation between Megaworld and DOT stipulated that the management of the ICC shall be awarded to a private entity. If the TIEZA fails to find a management contractor, then DOT/TIEZA will be in violation of the contract of donation.
I am not a lawyer but I know enough law to understand that failure of one of the parties to perform any one of the conditions could be ground for rescission of the donation. If the contract is rescinded on this account, the entire ICC will go to Megaworld as donor.
Heaven forbid, but this is the sweetest sweetheart deal that could possibly happen between Senate President Franklin Drilon and Megaworld. Without working up a sweat, Megaworld will have a convention center on its laps, courtesy of the government.

Sweetheart deal

Anytime soon — if it hasn’t happened yet — the Tourism Infrastructure and Enterprise Zone Authority (TIEZA) will award the management contract for the soon-to-be-finished Iloilo Convention Center at the Iloilo Business Park of Megaworld Corp. in Mandurriao, Iloilo City.

The management of the ICC, which is expected to be finished at a “reduced” budget of P679 million by late June this year, is one of the conditions set by Megaworld when it donated the 1.7-hectare lot to the Department of Tourism as site of the facility.

And guess who will be the ultimate contractor to manage the ICC?

No other than Megaworld Corporation.

It will be a classic case of Megaworld having its cake and getting to eat it, too. It donated land which it bought at P2,500 per sqm. between two of its five-star hotels, Richmonde Hotel and Marriot Inn. Its act of “generosity” will reap enormous returns because it will now have a convention center at no cost to the company.

This was made possible, of course, by its benefactor, Senate President Franklin Drilon, who packaged the transaction that would cost the national government a whooping P679 million! It is a scam that is not likely to be investigated in earnest until a new administration comes along. As it is, Drilon enjoys the full protection of the “matuwid na daan” President, Benigno Simeon C. Aquino III.

But no matter how Drilon tries to deodorize the transaction, it is so rotten that its stink could be smelled as far away as Boracay, where I am writing this piece. Quite a number of people I met here groaned in dismay when the conversation turned to the ICC. That’s because the construction boom in Boracay hasn’t abated, and businessmen here know what it costs to build huge hotels and resorts. One businessman told me, “With that amount, I could have built a convention center with a five-star hotel.”

Hence, Megaworld will get the better end of the bargain when the ICC is completed, one that will be the envy of other big developers like SM and Ayala. It gave DOT a design for the ICC and it is getting it at no cost. All it needs to do is making a semblance of giving government a share of the income. With the ICC, it can market its two five-star hotels as venue for large national and international conventions. It is being handed over by the DOT on a silver platter.

The graft cases I filed against Drilon et al are now in the final evaluation stage in the Ombudsman. Am I confident that the Ombudsman will hold the principal characters culpable for the litany of violations of the government procurement law and anti-graft and corrupt practices act? Ultimately, the Ombudsman will be compelled to charge them. But maybe not soon enough. The Ombudsman is pre-occupied with running after the Binays.

The facts, and the law, are on my side. That’s the reason I can confidently say the Ombudsman will ultimately indict the respondents. The violations of law and policy are so glaring, and the defenses put up by the respondents have been weak. Most of them attacked me for supposedly saying I had no evidence when I appeared before the Senate Blue Ribbon Committee four months ago. Unfortunately for them, it’s not what I said that matters to the Ombudsman. It’s the evidence on the record.

In this case, I was able to turn the table around and used their own documentary evidence against them. This is the beauty of the law. Innocent-looking documents submitted by your opponents can prove more lethal to them. I take great pride in waging this battle because I was pitted against the best lawyers in the country. For a non-lawyer, it flatters me to be able to cause seasoned lawyers consternation and great labor.

There’s nothing I can do to stop the transaction. Drilon, in his speech during the Dinagyang, arrogantly boasted that no Ilonggo can derail his pet project. Of course, it wasn’t the project that I intended to stop. It was the wanton plunder that took place in the guise of implementing the project.

I am now just awaiting the Regional Trial Court of Pasay City to set my arraignment on the four counts of libel that Drilon filed against me. Facing Drilon’s libel charges against me is the greatest challenge ever to confront me. But I am not afraid. I know I am in the right. In the end, truth will triumph, and justice will be mine.

ICC a monumental fraud using DAP funds – Mejorada

Phase I ICC

PRESS RELEASE

The Supreme Court ruling upholding the unconstitutionality of the Disbursement Acceleration Program (DAP) sets the stage for the prosecution of Senate President Franklin Drilon for deliberately pushing for “augmentation” in the hundreds of millions of pesos for a project that wasn’t on the General Appropriations Act (GAA), former Iloilo provincial administrator Manuel Mejorada said.

In a statement following the announcement of the SC ruling, Mejorada said the Iloilo Convention Center was a project of the Department of Tourism (DOT) through the Tourism Infrastructure and Enterprise Zone Authority (TIEZA) using the latter’s corporate funds.

Describing the ICC as “a monumental fraud”, Mejorada said Drilon used his clout and influence to secure the release of P300 million in DAP funds for phase I of the project despite his knowledge that there was no item in the GAA for 2012 and 2013 to augment in the first place.

Mejorada said the SC ruling strengthens his plunder case against Drilon for being the proponent of the release of P300 million in DAP funds for the ICC.

On January 26, Mejorada submitted to the Ombudsman his reply-affidavit to refute the “lame excuses” given by Drilon and his co-respondents in his complaint for plunder, malversation of public funds, perjury, dishonesty and grave misconduct.

“There’s no more dispute that Drilon is the proponent for the release of the DAP funds as he had admitted it during the Blue Ribbon Committee hearing on the issue last Nov. 13,” Mejorada said.

He expressed confidence that the Ombudsman will find probable cause and indict Drilon, DPWH secretary Rogelio Singson, DOT secretary Ramon Jimenez Jr., TIEZA chief Mark Lapid, DPWH Usecs Romeo Momo and Jaime Pacanan, DPWH regional director Edilberto Tayao and BAC chairman Marily Celiz.

Mejorada said the ICC is riddled with violations of RA 9184 and other laws, including RA 8974 that governs the acquisition of private property for right-of-way and sites for infrastructure projects.

“The number one violation is the Deed of Donation (between Megaworld and DOT) over the 1.7-hectare property on which the ICC is being constructed,” he said.

He said the implementing rules and regulations for RA 8974 stipulates that donations of land for ROW and sites for government infrastructure projects should be unconditional.

In the Deed of Donation, Megaworld required DOT to use the property as site for a convention center and allocate P200 million to build the same. It also imposed the condition that DOT use its proposed conceptual design for the project.

Mejorada insisted that the Deed of Donation set the funding parameters for the ICC.

“It is crystal clear that Megaworld had calculated it would cost DOT only P200 million to build the ICC based on the proposed conceptual design it provided,” Mejorada said.

Mejorada also pointed out that the architectural firm of William V. Coscolluela and Associates, did not have a contract to serve as consultant for the DOT. Because of this, it had no legal personality to prepare the building plans for the government and review the technical bid proposal of Hilmarc’s, he added.

One of the most serious breaches of the government procurement reform law was the admission of Coscolluela that he allowed Hilmarc’s to revise its value engineering proposal after it was submitted to DOT for review and approval, he said.

“This violates the pass/fail criteria in RA 9184 because proposals cannot be revised, altered or revised once these are submitted to the procuring entity for evaluation,” he said.

Mejorada reiterated his motion filed with the Ombudsman to place Singson, Jimenez and the other public respondents under preventive suspension while the preliminary investigation of the case is on-going. (30)

Preventive suspension in ICC case sought

PRESS RELEASE

Former Iloilo provincial administrator Manuel Mejorada has asked the Ombudsman to issue preventive suspensions against two Cabinet members and five other officials charged in the alleged anomalies in the Iloilo Convention Center project, saying the evidence against them is strong and their continued stay in office might prejudice the investigation.

In a two-page motion filed December 17, Mejorada said the respondents in the administrative case are facing charges of dishonesty and grave misconduct which warrant their preventive suspension as they occupy powerful positions in the Department of Tourism, Department of Public Works and Highways as well as the Tourism Infrastructure and Enterprise Zone Authority (TIEZA).

Mejorada made public the document only yesterday to give time for its delivery by the Philippine Postal Corp. after the Christmas holidays.

Mejorada cited Section 9, Rule III, of the Ombudsman Rules of Procedure which empowers the Ombudsman to issue preventive suspension orders against respondents in an administrative case for a period not exceeding six months while a preliminary investigation is being conducted.

Charged in the administrative case are DPWH Secretary Rogelio Singson, DOT Secretary Ramon Jimenez Jr., TIEZA chief operating officer Mark Lapid, DPWH undersecretaries Jaime Pacanan and Romeo Momo, DPWH Region VI regional director Edilberto Tayao and BAC chairman Marilyn Celiz.

The project proponent, Senate President Franklin Drilon, is charged with them in the criminal case along with architect William V. Coscolluela and contractor Hilmarc’s Construction Corp.

Mejorada said he has received the counter affidavits of the respondents.

“After going through their voluminous counter affidavits and supporting documents, it becomes clear from their own testimonies that a giant fraud was committed in the ICC project,” Mejorada said.

In a statement, Mejorada said “the respondents themselves dug their own grave with their counter affidavits.”

He cited the admission of Coscolluela that the “value engineering” bid proposal submitted by Hilmarc’s did not meet his criteria and had to be revised with help from a structural design consultant he endorsed.

“That’s all I need to drive home the point that the award of the contract was illegal,” he said.

But he added that he found “an abundance of other evidence” from the counter affidavits of the other respondents who were forced to disclose records that were previously kept under wraps. (30)

Stealing APEC 2015

Jed Patrick E. Mabilog, Ph.D. (from a garage sale), spent one hour this morning attacking me for supposedly stealing from Iloilo City the glory of hosting the 2015 APEC Ministers Meeting.
He accused me (without mentioning my name, stupid coward that he is) of depriving taxi drivers, souvenir shop owners, restaurants, hotels and other businesses of the income he claims would shower upon them should the meetings push through as planned.
Well, okay Mr. Mayor, I plead guilty as charged.

IloiloCenter1
I stole another opportunity for your money-making schemes.
So what do you want to do? Send me to jail for it?
Mabilog thinks Ilonggos are as stupid as he is.
How can one man stop this entire activity with a national government, and a Big Man, behind it?
If everything is above-board, and there are no anomalies, there is no individual or group that could prevent its staging.
But everything about the Iloilo Convention Center is irregular, illegal.
That’s the reason Senate President Drilon is trying to muster all the support he can get to discredit me and camouflage his misdeeds.
This is indeed a funny situation.
I am a mere “batil” or wood-hulled boat, and he has deployed the entire Navy fleet against me.
Their own actions betray their corruption.

Don’t blame me, Mr. Senate President

I find it pathetic for Senate President Franklin Drilon to blame me for any delays in the completion of the Iloilo Convention Center.

I did nothing to stop the project. All I did was file a case before the Ombudsman. It’s not my fault that the procurement and implementation of this project is fraught with violations of the law. The bidding was rigged, and the project is overpriced. Am I to be blamed for these irregularities?
The Senate President should stop blaming anybody else. It’s his fault. He engineering everything.
And why must contractors be afraid to join the bidding? In his statement before the Blue Ribbon Committee, Efren Canlas of Hilmarcs Construction Corp. said he didn’t join the first bidding for Phase II because he found the approved budget for the contract too low. That is perhaps the reason why contractors aren’t taking part in the bidding.
Definitely, it’s not my fault that Canlas and other contractors look at it that way.

‘No mas’?

Below is my press statement in reaction to the initiative of Senator Koko Pimental to cut short the Blue Ribbon Committee investigation into the anomalous Iloilo Convention Center project:

Is the Liberal Party declaring “no mas” in the face of emerging evidence validating my assertions that the bidding and implementation of the Iloilo Convention Center was marred by irregularities such as rigging of the bid and overpricing?

That is the signal being sent by the move of Senator Aquilino “Koko” Pimentel III to bring the Blue Ribbon Committee investigation into these issues to an abrupt halt.
Far from the claim of Senate President Franklin Drilon and his party mates that I failed to present evidence to back up my allegations, I have proof and this was strengthened by the testimonies of DPWH Secretary Rogelio Singson and DOT Secretary Ramon Jimenez in last Thursday’s hearing.
On the issue of overpricing:
1) In computing the unit cost for the building, Singson included the roof deck area to arrive at a figure of 11,900 sqm. Even assuming that this is true, the unit cost is still P63,000 per sqm, which is more than double the industry standard of P30,000 per sqm. Singson insists the industry standard cannot be applied to government infrastructure. But he could not explain why it is more than double the P26,000 per sqm. of the SMX n the Mall of Asia.
2. The real floor area of the ICC is 8,932 sqm. based on the Invitation to Bid published by the DPWH in the Manila Standard Today on July 5, 2013 in describing the scope of works for the completion of the structure. If this figure is used, and this is the figure upon which the unit cost should be based, the construction cost would amount to P84,000 per sqm. That is glaring evidence of overpricing.
3. In his testimony, Singson said DPWH is trying to bring down the unit cost to P55,000 per sqm.  That is an admission of overpricing. If that is going to happen, DPWH will be able to slash P95.2 million from the total contract price based on 11,900 sqm as base floor area. That is equivalent to 13% of the present estimated project cost to P747 million.
4. If the unit cost goes down to P55,000 per sqm. and we use the actual floor area of 8,932 sqm., then the overprice is still a whooping P72 million.
5. Singson testified that the architectural design made provisions for an additional two floors, which is why the foundation had to be strengthened. This is a case of over design of the specifications to justify the supposed need for more pile driving. The allocation for pile driving and foundation work in the presentation of Singson is P107,000,000. But the design of the building makes additional floors impractical and unnecessary. The symmetry and balance of the “iconic architecture” would be upset, and it would lose the unique design to make it attractive.
6. By Singson’s own testimony, the overpricing of the project becomes apparent, and the Liberal Party doesn’t want to expose the Senate President to more embarrassment as what happened in last Thursday’s hearing.
On the issue of malversation and plunder:
1. Based on the above presentation, the overprice ranges from at least P74 milliion to P95 million, or even more, depending on further examination of the building plans by technical personnel of the Commission on Audit. The malversation of amounts more than P50 million is plunder. As this is a conspiracy, the act of one is the act of all.
2. No less than Senate President Drilon admitted how deep his involvement in the project is. In fact, during the hearing last Thursday, he was heard “cuing” Singson and Jimenez with their answers. He chided Senator Nancy Binay at one point, forgetting that he had inhibited himself from the hearing, and was there as a resource person. Senator Serge Osmena also took a swipe at him for trying to interject for Jimenez who found difficulty answering the questions the Cebuano senator threw at him. His own actions betrayed the truth that his involvement was more than looking for funds. It took on the nature of ownership, and he could not extricate himself from the issue that he meddled in every aspect of the implementaton.
It would be tragic if the Liberal Party bury the truth by simply shutting the door to a deeper inquiry. It will have abdicated its mandate for oversight, accountability and good governance. By itself, terminating the inquiry at a time when more questions emerged than were answered would be tantamount to betrayal of public trust.

Inappropriate behavior

Senate President Franklin Drilon was definitely out of order when he raised his voice at a fellow senator Nancy Binay during last Thursday’s Blue Ribbon Committee investigation into the overpriced Iloilo Convention Center in Mandurriao, Iloilo City.Phase I ICC

Binay was asking DPWH Secretary Rogelio Singson on where the funding for the project had come from. Singson was giving vague answers. Binay asked him, “was there a legislator who sourced the funds for project?”

Drilon flared up. “Stop beating around the bush. Why don’t you mention my name? Sinabi ko na nga na ako ang naghanap ng pundo para diyan eh!”

That display of temper in a Blue Ribbon Committee hearing might have been acceptable had it come from a member.

But Drilon was not there as a Senator; he had inhibited himself and was there as an ordinary resource person. At that precise moment, he had voluntarily stripped himself of his position as Senate President for purposes of the investigation. He was involved in the project.

Drilon’s inappropriate behavior wasn’t confined to his temper tantrum.

During the course of questioning by Senators Serge Osmena and Koko Pimentel, Drilon was unable to restrain himself from interjecting and whispering (audibly) answers for Singson and DOT Secretary Ramon Jimenez. He cued them for their answers.

It was a clear breach of rules. He was behaving more of counsel for Singson and Jimenez. His demeanor betrayed an apprehension that Singson and Jimenez might blurt out answers that would prejudice him. That the Chairman, Senator TG Guingona, just left him alone in doing that reinforced the perception that the BRC was going to protect the Senate President.

Tear down the veil of hypocrisy

Many Ilonggos are angry to hear that our city grabbed the national limelight as the “bird’s nest of corruption” in the country.
They should be angry. Nobody wants to see our city gain such notoriety. And I equally angry and hurt to see it happen.
Why did I have to say that before the Senate? I have to let the entire nation know that corruption of unprecedented magnitude is draining the public coffers so rapidly, and there’s no effort to plug the leak.
The problem is not me. These Ilonggos should not turn their anger at me. They should be angry at the people who preside over this empire of corruption. Our city can never be great again if this continues.
Am I fabricating facts about corruption?
No. What I mentioned are just the more prominent of the graft-ridden projects we have seen in Iloilo City. At the lower level, we have the “tuklo” in the public markets, the procurement scandals in City Hall and traffic aides filching money from jeepney drivers.
If these people still don’t comprehend the magnitude of the problem, then, they too, become part of the problem.
We can never stop corruption for as long as we pretend not to se