Losing Investments in the City

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The State-owned Bases and Conversion and Development Authority (BCDA) was established to administer, manage and operate former American military bases in the country after the Philippine Senate rejected the renewal of the prolonged stay of the United States (US) military bases in the country. One of the US bases that was taken over by the BCDA was the former Camp John Hay air station situated in Baguio City, the country’s undisputed Summer Capital.

Subsequently, the BCDA decided to privatize the operation of a 258-hectare portion of the 686-hectare Camp John Hay forest reservation, now known as the John Hay Special Economic Zone (JHSEZ), to be developed into a world-class multi-use tourism center that will contribute in perking up the local economy.

Prior to the bid out of the privatization of the JHSEZ, the members of the then local legislative body passed Resolution 362, series of 1994 outlining the 19 conditionalities of the local government which must be adhered to by the BCDA and the winning developer in the proposed development of the former American rest and recreation center. During the conduct of the public bidding sometime in October 1997, the Villar-owned Manuela Land submitted a whooping bid of around P1.2 billion annually for the proposed 50-year lease period but the said company decided to back out of the project, thus, the BCDA awarded the lease to the former Fil-Estate Penta Capital consortium which had the second highest bid of P425 million annually. Under the lease agreement between the developer and BCDA, the local government is entitled to a 25-percent share of the annual lease rentals of the former American military base.

In the course of the implementation of the supposed large-scale development of the leased portion of the forest reservation, there were unforeseen circumstances that caused serious delays in the prosecution of the projects considering the alleged failure of the government to deliver its commitments to the developer, thus, the lease agreement underwent several revisions that resulted in further unnecessary delays in the setting-up of facilities that should have been constructed to allow the developer to recover its investments for the project.

The brewing feud between the BCDA and the developer escalated until it was subjected to mandatory arbitration resulting to the recommendation of the Makati-based Philippine Dispute Resolution Center, Inc. for the mutual restitution of the 22-year old lease agreement and directed to the BCDA to pay to the developer over P1.4 billion in accumulated paid lease rentals and for the developer, Camp John Hay Development Corporation (CJHDevCo), to turnover to the BCDA the leased premises in tenantable condition.

However, the BCDA appealed the decision of the arbitral center to the Court of Appeals (CA) but the State Corporation lost the case in appeal, thus, the same was appealed to the Supreme Court (SC) where the case is still pending and awaiting resolution. While the case is still pending with the high tribunal, it is still status quo inside the JHSEZ where the developer is still managing the affairs of the leased premises while the BCDA still oversees the overall situation in the said area.

On the other hand, several groups of doctors are eyeing a portion of the BCDA property to put up a state-of-the-art hospital to help promote the city as a prime medical tourism destination because of its weather condition conducive to recovering patients, Ironically, the details of the project have not yet been laid out nor was thorough information shared on such plans which attracted opposition to the project that eventually resulted to its cancellation by the proponents.

We believe that it is the people and the local government that is losing from this impasse in the JSEZ. From the start, we had been advocating for the out-of-court settlement of the problem so that there will be avenues for growth and development that could be explored for the realization of the overall objectives of the privatization which has been incomplete amidst the lapse of over two decades since the signing of the agreement.

Surely, we must monitor that BCDA and the developer maintain a bigger portion of the property as a green area to help sustain the good state of the environment of the city, one of the conditionalities. Surely, there are also diverse ideas on how these conditionalities are to be implemented. What is important is that there is a forum for the airing of ideas to get the best option in meeting the objectives of ensuring that it remains a green area, the healthy lungs of the city. As the city’s constituency, we are entitled to be heard. As a matter of fact, that area is a forest reservation and our leaders, BCDA, and us as the beneficiaries of the air cleansed by the forest, must be vigilant of any effort to compromise the health of that lung.

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