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No. 158, Series of 2009, the initial TOR under Sangguniang Panlungsod Resolution No. 114, Series of 2009 was superseded/repealed, in order to ensure that only the best possible terms and conditions would be secured for the greater good and welfare of the local community, while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

2009 R - 169 - APPROVING THE JOINT RECOMMENDATION OF THE NEGOTIATION TEAM OF THE CITY AND SM PRIME HOLDINGS, INC. RELATIVE TO THE UNSOLICITED PROPOSAL

EXCERPTS FROM THE MINUTES OF THE REGULAR SESSION OF THE SANGGUNIANG PANLUNGSOD OF OLONGAPO, HELD ON NOVEMBER 10, 2009, AT THE CITY HALL.

PRESENT:

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

Hon. Gina Gulanes-Perez - - City Councilor

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:

Hon. John Carlos G. delos Reyes- - City Councilor

RESOLUTION NO. 169

(Series of 2009)

A RESOLUTION APPROVING THE JOINT RECOMMENDATION OF THE NEGOTIATION TEAM OF THE CITY AND SM PRIME HOLDINGS, INC. RELATIVE TO THE UNSOLICITED PROPOSAL FOR THE LONG-TERM LEASE OF THE OLONGAPO CITY MALL

WHEREAS, under Section 16 of the Local Government Code of 1991 (RA No. 7160), Local Government Units are mandated to promote the general welfare of its people, particularly by, among others, enhancing economic prosperity and social justice, and promoting full employment;

WHEREAS, under Section 18 of the Local Government Code of 1991 (RA No. 7160), Local Government Units are, among others, empowered to lease its real property and/or apply its resources and assets for productive, developmental, or welfare purposes;

WHEREAS, while under Executive Order No. 72 (1987) Local Government Units, through its local chief executive, may enter into direct negotiation for the lease of its properties, the City utilized the public bidding procedure to ensure greater transparency in the process and competitiveness in securing terms and conditions most beneficial to the entire community;

WHEREAS, pursuant to City Council Resolution No. 79 (Series of 2009) dated 24 June 2009, the Hon. City Mayor James Gordon, Jr. was granted authority to negotiate, enter into, and sign a long-term lease agreement with the winning bidder and to prepare the Terms of Reference (TOR) regarding such bidding regarding the Olongapo City Mall;

WHEREAS, the TOR for the aforesaid bidding was formulated and embodied in City Council Resolution No. 114 (Series of 2009) dated 19 August 2009, which was however repealed/superseded by City Council Resolution No. 158 (Series of 2009) dated 21 October 2009 which was promulgated by the City Council to secure the best possible terms and optimum benefits from the long-term lease of the Olongapo City Mall;

WHEREAS, on 22 October 2009, SM Prime Holdings, Inc., a respected major mall developer with an estimated capitalization of Twenty Billion Pesos (PHP20,000,000,000.00) in the country submitted to the City Government of Olongapo, an unsolicited proposal whereby it proposed to lease the Olongapo City Mall with the proposed terms that, among others, it shall automatically assume the City’s obligations with the Land Bank of the Philippines and the Development Bank of the Philippines in the estimated amount of One Hundred Twelve Million Six Hundred Twelve Thousand and Three Hundred Eight Pesos (PHP 112,612,308.00) and shoulder the entire redevelopment cost of the Olongapo City Mall, these aside from remitting lease/rent payments to the City;

WHEREAS, on 28 October 2009, the City Council approved Resolution No. 162 (Series of 2009) essentially (a) approving the “Swiss/Competitive Challenge” method as a proper and legal mode for the awarding of a long-term lease contract over the Olongapo City Mall property, (b) accepting SM’s unsolicited proposal, and (c) authorizing the Mayor to form a committee to negotiate and formalize with SM the applicable terms of reference for the above-described Swiss/Competitive Challenge exercise (the “Committee”), with the foregoing subject to auditing regulations and other pertinent rules;

WHEREAS, as elucidated under Commission on Audit (COA) Decision No. 2009-064 dated 20 July 2009, the Swiss/Competitive Challenge Mode of public bidding is legally sanctioned as “it approximates the nature of public bidding which are essentially transparency and competitiveness”;

WHEREAS, pursuant to the foregoing, the Finance Committee reviewed the unsolicited proposal of SM Prime Holdings, Inc. and thereafter presented to the latter, the terms acceptable and beneficial to the City, with due regard to public interest;

WHEREAS, pursuant to the mandate of transparency and competitiveness in the bidding process, the terms and conditions distilled from the City’s negotiations with SM Prime Holdings, Inc. is embodied in a Memorandum of Agreement which must be confirmed as a condition precedent, subsequent to which the unsolicited proposal to be made subject of the competitive challenge shall be made public;

NOW, THEREFORE, on motion of City Councilor Edwin J. Piano co-sponsored by City Councilors Gina G. Perez, Rodel S. Cerezo, Aquilino Y. Cortez, Jr., Anselmo A. Aquino, Elena C. Dabu, Jonathan G. Manalo and Cheenee F. Hoya 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 Joint Recommendation of the Negotiation Team of the City and SM Prime Holdings, Inc. relative to the Unsolicited Proposal for the Long-Term Lease of the Olongapo City Mall.”

APPROVED, November 10, 2009.

CYNTHIA G. CAJUDO

City Vice-Mayor & Presiding Officer

GINA GULANES-PEREZ JOHN CARLOS G. DELOS REYES

City Councilor City Councilor

(Absent)

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

2009 R - 162 - ACCEPTING THE PROPOSAL OF SM PRIME HOLDINGS, INC., AND APPROVING THE COMPETITIVE CHALLENGE PROCEDURE AS A MODE OF AWARDING THE LEASE

EXCERPTS FROM THE MINUTES OF THE REGULAR SESSION OF THE SANGGUNIANG PANLUNGSOD OF OLONGAPO, HELD ON OCTOBER 28, 2009, AT THE CITY HALL.

PRESENT:

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

Hon. John Carlos G. delos Reyes- -City Councilor

Hon. Rodel S. Cerezo- - - “ “

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 - - - “ “

ABSENT:

Hon. Gina Gulanes-Perez - - - City Councilor

(On Official Business)

Hon. Sarah Lugerna Lipumano-Garcia - - City Councilor

Hon. Cheenee F. Hoya- - - SK Federation President

(On Official Business)

RESOLUTION NO. 162

(Series of 2009)

A RESOLUTION ACCEPTING THE PROPOSAL OF SM PRIME HOLDINGS, INC., AND APPROVING THE COMPETITIVE CHALLENGE PROCEDURE AS A MODE OF AWARDING THE LEASE CONTRACT RELATIVE THERETO, SUBJECT TO EXISTING AUDITING RULES AND APPLICABLE LEGAL REQUIREMENTS

WHEREAS, on 22 October 2009, SM PRIME HOLDING, INC. submitted an unsolicited proposal for the long-term lease of the Olongapo City Mall containing the following salient features: (a) a lease term of twenty five (25) years renewable for another twenty five (25) years; (b) assumption of the city’s obligations to DBP and LBP amounting to PhP112,612,308.00; (c) a fixed annual lease rate equivalent to Pesos TWENTY-FIVE (PhP25.00) per square meter or FIVE PERCENT (5%) of the prevailing rental income of the property for existing retail space whichever is higher; (d) performance bond equivalent to an amount to be determined within the range of 5%-10% of the overall present value of the Lease Contract; and (e) shouldering the entire redevelopment cost for the entire project;

WHEREAS, the proponent is 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);

WHEREAS, the said proposal is hereby being accepted by the City – which acceptance however shall not bind the City to enter into a lease contract but shall only serve as the “go signal” for further negotiations;

WHEREAS, the Competitive / Swiss Challenge Mode is a legally sanctioned mode of bidding, and is defined under Commission on Audit (COA) Decision NO. 2009-064 (dated 20 July 2009) where it was held that “the Swiss challenge proposal approximates the nature and requirements of a public bidding which are essentially transparency and competitiveness”, ``it is just a variation of the entire public bidding process”;

WHEREAS, the City Mayor is hereby authorized to form a committee that would formulate the Terms of Reference (TOR) for the long-term lease through the Competitive / Swiss Challenge Mode, pursuant to and consistent with existing auditing rules and legal requirements;

NOW, THEREFORE, on motion of City Councilor Edwin J. Piano co-sponsored by City Councilors Rodel S. Cerezo, Angelito W. Baloy, Aquilino Y. Cortez, Jr., Anselmo A. Aquino, Elena C. Dabu and Jonathan G. Manalo, 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 Accept as it hereby Accepts the Proposal of SM Prime Holdings, Inc., and Approving the Competitive Challenge Procedure as a Mode of Awarding the Lease Contract Relative Thereto, Subject to Existing Auditing Rules and Applicable Legal Requirements.

APPROVED, October 28, 2009.

CYNTHIA G. CAJUDO

City Vice-Mayor & Presiding Officer

GINA GULANES-PEREZ JOHN CARLOS G. DELOS REYES

City Councilor City Councilor

(On Official Business) (Opposed)

RODEL S. CEREZO SARAH LUGERNA LIPUMANO-GARCIA

City Councilor City Councilor

(Absent)

EDWIN J. PIANO ANGELITO W. BALOY

City Councilor City Councilor

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

(On Official Business)

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