Baguio mayor pushes PPP for market rehab: SP wants study

By Jordan G. Habbiling

BAGUIO CITY – Mayor Benjamin Magalong urged on Monday city councilors to approve a public-private partnership lease for the P6-billion rehabilitation of the Baguio public market.

But the city council urged the executive body to present a more extensive study and justification why the city government is inclined to tie in with a private firm for the redevelopment of the Baguio City Public Market.

During the city council's regular session on July 6, the city budget office agreed to present a comparative analysis of different modalities in constructing the new multi-level market building as per the council’s request.

The comparative analysis juxtaposed equity financing (xity’s own fund source) and debt financing (through loan) against public-private partnership through lease agreement and public-private partnership through joint venture.

The comparative results showed that equity financing and debt financing are superior in terms of revenue with P10.3 billion and P8.2 billion projected annual net incomes against the P6.9 billion and P5.9 billion projected annual net incomes through PPP-Lease and PPP-Joint Venture.

The analysis also forecasted that equity financing and debt financing would fare better in terms of return of investment with 8.58% (11 payback years) and 6.86% (14 payback years) against PPP-Lease with 5.77% (18 payback years) and PPP-Joint Venture with 4.92% (21 payback years).

Members of the city council, however, said the figures presented do not substantiate the claim that the said project would be better off when undertaken through a private-public partnership modality.

City Budget Officer Leticia Clemente said their office is not in the position to impose financial decisions with regard to the project.

“We are just presenting to you facts and figures we can use for our collective decision. However, if we believe the project is urgent because it is long overdue, then we should find a way to fund it quickly and that is through PPP,” Clemente explained.

Councilors Philian Weygan-Allan, Michael Lawana, and Isabelo Cosalan advised the CBO to pursue a more inclusive and comprehensive analysis indicating the pros and cons of the four modalities to aid the council in coming up with a sound decision regarding the matter.

The councilors likewise emphasized the need to conduct other studies that do not only focus on the project's financial feasibility but also touch on other aspects such as its socio-economic acceptability.

Councilor Mylen Victoria Yaranon concurred with the other council members, asserting that a more in-depth analysis would help city officials make the constituents understand why the City is abandoning its initial plan to either source out from its available fund or go for debt financing and why it is pursuing a PPP agreement for the said project instead.

Yaranon said the multi-level market building under the proposed PPP deal with either SM Prime Holdings or Robinsons Land Corporation might not be able to house vendors in other areas which the City promised to accommodate as both proponents will also use portions of the area for commercial business.

Mayor Magalong and City Administrator Bonifacio dela Peña reiterated the earlier findings of the City Budget Office that equity financing (City’s own fund source) and debt financing (through loan) are not financially viable for the market redevelopment project, thus asserting that the PPP modality was “the only choice” left.

“If you ask me personally, I am strongly recommending the PPP modality for the public market modernization. The city government will not spend anything, and also, this public-private partnership will generate revenues for the city,” Magalong said.

The mayor said the city government will be the one to manage the city market once the new building is already fully operational.

The city council will to discuss the matter next week as the recommendation whether to amend all council resolutions pertaining to the market redevelopment is pending before the SP's committee on laws, human rights and justice.

The amendment proposed by dela Peña will align the council resolutions with the process and evaluation being done by the Public-Private Property for the People Initiative (P4) Selection Committee for the unsolicited proposals submitted by SM Prime Holdings and Robinsons Land Corporation.