2009 R - 182 - APPROVING THE ISSUANCE OF A NOTICE OF AWARD OF THE LONG-TERM LEASE OF CITY MALL TO SM PRIME HOLDINGS, INC.

EXCERPTS FROM THE MINUTES OF THE REGULAR SESSION OF THE SANGGUNIANG PANLUNGSOD OF OLONGAPO, HELD ON NOVEMBER 24, 2009, AT THE CITY HALL.

PRESENT:

Hon. Cynthia G. Cajudo - City Vice-Mayor & Presiding Officer

Hon. Gina Gulanes-Perez - - City Councilor

Hon. John Carlos G. delos Reyes - “ “

Hon. Rodel S. Cerezo - - - “ “

Hon. Sarah Lugerna Lipumano-Garcia - - “ “

Hon. Edwin J. Piano- - - “ “

Hon. Angelito W. Baloy - - “ “

Hon. Aquilino Y. Cortez, Jr. - “ “

Hon. Anselmo A. Aquino- - - - “ “

Hon. Elena C. Dabu- - “ “

Hon. Jonathan G. Manalo- - “ “.

Hon. Cheenee F. Hoya- - SK Federation President

ABSENT:

None.

RESOLUTION NO. 182

(Series of 2009)

A RESOLUTION APPROVING THE ISSUANCE OF A NOTICE OF AWARD OF THE LONG-TERM LEASE OF THE CITY MALL TO SM PRIME HOLDINGS, INC. AND AUTHORIZING THE CITY MAYOR TO ENTER INTO A CONTRACT OF LEASE PURSUANT THERETO

WHEREAS, pursuant to Sangguniang Panlungsod Resolution No. 54, Series of 2008, it was recognized that there is a need to rationalize the utilization of the Olongapo City Mall (OCM) through a long-term lease, with an adjunct retirement of loan obligations relative thereto, which would consequently result in greater leeway for more socio-economic projects which will ultimately benefit the people of Olongapo;

WHEREAS, pursuant to Sangguniang Panlungsod Resolution No. 79, Series of 2009, a streamlined process was instituted to ensure that efficiency and an investment conducive mechanism would be in place, and in conjunction thereto, granting authority to the City Mayor to negotiate and enter into a long-term lease contract over the OCM with a person or entity qualified under legal processes and compliant with pertinent legal requirements;

WHEREAS, pursuant to Sangguniang Panlungsod Resolution No. 114, Series of 2009, an initial Terms of Reference (TOR) was devised to ensure that the terms and conditions of any long-term lease of the OCM would be to the best interests of the people of Olongapo;

WHEREAS, after the formulation of the TOR, no long-term lease of the OCM was ever realized for want of qualified bidders;

WHEREAS, pursuant to Sangguniang Panlungsod Resolution No. 158, Series of 2009, the initial TOR under Sangguniang Panlungsod Resolution No. 114, Series of 2009 was superseded/repealed, in order to ensure that only the best possible terms and conditions would be secured for the greater good and welfare of the local community, while maintaining flexibility compliant with pertinent laws;

WHEREAS, on 22 October 2009, SM PRIME HOLDINGS, INC., a well-known and respected real estate developer and retailer, with a cumulative project cost investment in the entire country of TWENTY BILLION PESOS (PhP20,000,000,000) submitted an unsolicited proposal for the long-term lease of the OCM, proposing the terms: (a) a proposed lease period of twenty five years (25) renewable for another twenty five (25) years; (b) assumption of the city’s obligations with the Development Bank of the Philippines (DBP) and the Land Bank of the Philippines (LBP) amounting to PhP112,612,308.00; (c) submission of a performance bond equivalent to an amount to be determined within the range of five to ten percent (5%-10%) of the overall present value of the desired lease agreement; and (c) shouldering the entire redevelopment costs of the OCM;

WHEREAS, pursuant to Sangguniang Panlungsod Resolution No. 162, Series of 2009, the unsolicited proposal of SM Prime Holdings, Inc. was accepted by the City Council, and the Competitive/Swiss Challenge method was adopted as the legal mode of awarding the long-term lease contract of the OCM, as sanctioned under Commission on Audit Decision No. 2009-064 (20 July 2009), jurisprudence and the Department of Justice Opinion No. 93, (Series of 2000), and which resolution was promulgated an initial positive review by the City’s Appraisal and Finance Committees, but which acceptance served as a go-signal for more negotiations between the City and the potential lessor;

WHEREAS, pursuant to Sangguniang Panlungsod Resolution No. 169, Series of 2009, the “Joint Recommendation of the Negotiation Team of the City and SM Prime Holdings, Inc.” relative to the long-term lease of the OCM was approved, subject to pertinent legal mandates;

WHEREAS, pursuant to Sangguniang Panlungsod Resolution No. 170, Series of 2009, to ensure transparency and competitiveness in the process of awarding of the long-term lease of the OCM, aside from confirming the negotiations between the City and SM Prime Holdings, Inc., the Terms of Reference (TOR), Guidelines and Schedule of Activities Relative to the Competitive/Swiss Mode Challenge was approved to clearly outline the procedures and requirements involved;

WHEREAS, the unsolicited proposal of SM Prime Holdings was made open to public challenge, through publication on Malaya, a newspaper of general circulation, and through public postings in conspicuous places, all announcing a public invitation for comparative lease proposals for the OCM and clearly outlining the timeline for the Competitive/Swiss Challenge which set until November 16, 2009 for, among others, the submission of a letter of intent to present a comparative challenge which is a condition precedent for the presentation of a comparative proposal;

WHEREAS, the period of submission for a condition precedent requisite letter of intent to present a competitive challenge lapsed without any other person or entity, legally qualified and compliant with legal mandates, making any submissions;

WHEREAS, pursuant to the Competitive/Swiss Challenge Mode, after the proponent SM Prime Holdings has taken the initiative to present an unsolicited proposal and the risk of redeveloping the OCM, together with the assumption of its appurtenant loan obligations, and which proposal is not prevailed upon by a more competitive proposal, a Notice of Award follows as a matter of course, to award the contract for the long-term lease of the OCM to SM Prime Holdings, Inc.;

NOW, THEREFORE, on motion of City Councilor Edwin J. Piano, with the majority decision of the Members of the Sangguniang Panlungsod present;

RESOLVED, AS IT IS HEREBY RESOLVED, by the Sangguniang Panlungsod in session assembled to approve as it hereby approves the issuance of a notice of award of the long –term lease of the City Mall to SM Prime Holdings, Inc. and authorizing the City Mayor to enter into a contract of lease pursuant thereto.

APPROVED, November 24, 2009.

CYNTHIA G. CAJUDO

City Vice-Mayor & Presiding Officer

GINA GULANES-PEREZ JOHN CARLOS G. DELOS REYES

City Councilor City Councilor

(Opposed)

RODEL S. CEREZO SARAH LUGERNA LIPUMANO-GARCIA

City Councilor City Councilor

(Opposed)

EDWIN J. PIANO ANGELITO W. BALOY

City Councilor City Councilor

(Opposed)

AQUILINO Y. CORTEZ, JR. ANSELMO A. AQUINO

City Councilor City Councilor

ELENA C. DABU JONATHAN G. MANALO

City Councilor City Councilor

CHEENEE F. HOYA

SK Federation President

ATTEST:

ELFLIDA S. SALMON

Council Secretary

APPROVED BY HIS HONOR, THE CITY MAYOR ON _____________________.

JAMES GORDON, JR.

City Mayor

ATTEST:

DELFIN A. JUICO, JR.

Secretary to the City Mayor